A firm plans to raise $4 million by borrowing at an interest rate of 16% and to raise $1 million by issuing common stock. The firm's stock has a beta coefficient of 2, the risk free interest rate is 6%, the average rate of return on stock is 9% and the marginal tax rate is 25%.
What is the firm's composite cost of capital?© BrainMass Inc. brainmass.com June 25, 2018, 4:17 am ad1c9bdddf
What is the firm's composite cost of capital?
Cost of equity= Risk free ...