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WACC

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Cookie Dough Manufacturing has a target debt−equity ratio of 0.63. Its cost of equity is 19 percent, and its cost of debt is 8 percent. If the tax rate is 33 percent, the company's WACC is percent. (Do not include the percent sign (%). Round your answer to 2 decimal places, e.g. 32.16.)

HERE ARE SOME HINTS

1. Debt-equity ratio => D/E. From this you should be able to figure out V (You have done this in lecture and in lab).

2. Determine the capital structure weights of debt and equity.

3. Use the WACC formula to solve the problem.

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Solution Summary

This solution provides all the steps to understand how to calculate the weighted average cost of capital (WACC).

Solution Preview

WACC = D/V X After tax cost of debt + E/V X cost of equity
We first calculate D/V and E/V given ...

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