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    Weighted average cost of capital

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    Cost of equity is 16%; the before tax cost of debt is 13% ; the marginal tax rate is 40%.
    Stock sells at book value.

    I need to calculate the after tax weighted average cost of capital using the following balance sheet.

    Assets Liabilities and Equity

    Cash = 120 Long term debt = 1,152
    Accounts receivable = 240 Equity = 1,728
    Inventory = 360
    Plant and equipment = 2,160
    Total assets = 2,880 Total liabilities and equity = 2,880

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    https://brainmass.com/economics/finance/weighted-average-cost-of-capital-104566

    Solution Preview

    Weighted average cost of capital is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources, which include common stock, preferred stock, bonds ...

    Solution Summary

    This solution is comprised of a detailed explanation to calculate the after tax weighted average cost of capital using the following balance sheet.

    $2.49

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