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Weighted average cost of capital

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7. A firm has debt of $5,000, equity of $16,000, a cost of debt of 8%, a cost of equity of 12%, and a tax rate of 34%. What is the firm's weighted average cost of capital?

7.29%
7.94%
8.87%
10.40%
11.05%

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

Solution Summary

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

$2.19