I need help in calcuating for Weighted average cost of capital.
The question go Suppose that George Industries has a cost of equity of 14%, no preferred stock and a cost of debt of 9%. If the target debt/equity ratio is 75% and the tax rate is 34%, what is Dugan 's weighted average cost of capital(WAAC)?
? Re ? Rd Tc
WAAC = (E/V) X 14% + (D/V) X 9% X (1-34%)
I can not fiqure what were (e/v) and (D/V) to complete the answer. Tommorrow is final exam I would like know were I am going wrong
E/V is the proportion of equity in the total capital. E is the amount of equity and V is the total capital. ...
The solution explains the the calculation of weighted average cost of capital