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Weighted Average Cost of Capital

If Firm X has a 28% cost of equity and a 10% before tax cost of debt capital. The firm's debt to equity ratio is 2. Firm X is interested in investing in a telecom project. The corporate tax rate is 35%. What is the weighted average cost of capital for Firm X?

Please include formulas and work process so I can understand where the answer came from.

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If Firm X has a 28% cost of equity and a 10% before tax cost of debt capital.  The firm's debt to equity ratio is 2.  Firm X is interested in investing in a telecom project. The corporate tax rate is 35%. What is the weighted average cost of capital for Firm X?

Step 1: Calculate the proportions ...

Solution Summary

Computes Weighted Average Cost of Capital (WACC) for a firm.

$2.19