# Weighted Average Cost of Capital

Not what you're looking for? Search our solutions OR ask your own Custom question.

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.

Â© BrainMass Inc. brainmass.com March 4, 2021, 9:18 pm ad1c9bdddfhttps://brainmass.com/business/weighted-average-cost-of-capital/weighted-average-cost-capital-233105

#### Solution Preview

Please see attached file:

If Firm X has a 28% cost of equity and a 10% before tax cost of debt capital.Â Â The firm's debt to equity ratio is 2.Â Â 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.

$2.49