WACC calculation
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WACC
A company has determined that its optimal capital structure consists of 30 percent debt and 70 percent equity. Given the following information, calculate the firm's weighted average cost of capital.
Rd = 6%
Tax rate = 35%
P0 = $35
Growth = 0%
D0 = $3.00
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The solution explains how to calculate the WACC
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WACC = Proportion of debt X after tax cost of debt + Proportion of equity X cost of equity
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