# Weighted Average Cost of Capital at Combinations of Debt/Equity

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A firm's current balance sheet is as follows:

Assets

$100

Debt

$10

Equity

$90

What is the firm's weighted-average cost of capital at various combinations of debt and equity, given the following information?

Debt/Assets After-Tax Cost of Debt Cost of Equity Cost of Capital

0% 8% 12% ?

10 8 12 ?

20 8 12 ?

30 8 13 ?

40 9 14 ?

50 10 15 ?

60 12 16 ?

https://brainmass.com/business/weighted-average-cost-of-capital/weighted-average-cost-capital-combinations-debt-equity-381855

#### Solution Preview

The term capital structure is used to represent the proportionate relationship between debt and shares. The various means ...

#### Solution Summary

The solution discusses what the WACC is at various combinations of debt and equity.

$2.49