Explore BrainMass

Explore BrainMass

    Weighted Average Cost of Capital

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    OUR Corp. has a current capital structure of $18 million in secured bonds paying 6.5% annual interest, and common stock with a market value of $42 million. Its marginal tax rate is 40% and its cost of common equity capital is 13%.

    a. What are the capital structure weights?

    b. Calculate the company's Weighted Average Cost of Capital.

    © BrainMass Inc. brainmass.com June 3, 2020, 4:33 pm ad1c9bdddf
    https://brainmass.com/economics/bonds/weighted-average-cost-of-capital-256377

    Solution Preview

    The answers are in the attached file:
    OUR Corp. has a current capital structure of $18 million in secured bonds paying 6.5% annual interest, and common stock with a market value of $42 million.  Its marginal tax rate is 40% and its cost of common equity capital is 13%.

    a. What are the capital structure ...

    Solution Summary

    Capital structure weights and Weighted Average Cost of Capital have been calculated.

    $2.19

    ADVERTISEMENT