Purchase Solution

Solve for Weighted-Average Cost of Capital (WACC)

Not what you're looking for?

Ask Custom Question

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

Purchase this Solution

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 ...

Purchase this Solution


Free BrainMass Quizzes
Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.