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Weighted average cost of capital

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A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity. Given the following information, calculate the firm's weighted average cost of capital.
cost of debt before tax = 6%; Tax rate = 40%; P0 = $25; Growth = 0%;
D0 = $2.00

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The solution explains how to determine the weighted average cost of capital

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WACC = Proportion of debt X after tax cost of debt + Proportion of equity X cost of equity
The ...

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