# Solve for Weighted-Average Cost of Capital (WACC)

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Find the WACC

KNOWN:

Book value of firms equity $10,000,000

Book value per share $20

Stock Sales Price / per share $30

Cost of Equity 15%

Bonds par value $5,000,000

Sell price % of Par (Bonds) 110%

Yield to Maturity (Bonds) 9%

Firms Tax Rate 40%

Market

Value

Debt FORMULA

Equity FORMULA

Total $0

After Tax Cost

Debt FORMULA

Equity 15%

WACC

Debt Formula %

Equity Formula %

Total

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##### Solution Summary

In a very detailed series of calculations, the response provides the answer to the problem.

##### Solution Preview

The formula for WACC is as follows:

WACC = Rd(1-Tc)D/V + Re E/V

Where

Rd is the cost of debt (i.e. the yield on bonds)

Re is the cost of equity

Tc is the ...

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