WACC and Corporate Tax for a Firm
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A firm has a corporate tax rate of 35%, a cost of debt of 8.25%, with a 15% cost on its equity capital. There is $15,000,000 in debt and $25,000,000 in equity in its capital structure. What is the weighted average cost of capital of this firm?
The same firm as in question 4 above changes its capital structure to reflect a 50/50 split between debt and equity (that is 50% debt and 50% equity). What will its cost of capital be now?
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Response explains WACC for a firm.
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International Finance Calculations - Weighted Average Cost
A firm has a corporate tax rate of 35%, a cost of debt of 8.25%, with a 15% cost on its equity capital. There is $15,000,000 in debt and $25,000,000 in ...
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