Purchase Solution

# Weighted average cost of capital (WACC)

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An interest payment of \$650 in a 20 percent tax bracket would result in a tax saving of what?

Joe Morton buys a piece of equipment for \$200,000. He puts down \$40,000 and finances \$160,000. Joeâ??s opportunity cost is 4%, and the lenderâ??s interestâ??s rate is 8%. Find the weighted average cost of capital (WACC).

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The response provides steps to compute the weighted average cost of capital (WACC).

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An interest payment of \$650 in a 20 percent tax bracket would result in a tax saving of what?

Tax saving =Interest payment * Tax ...

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