Your firm has a debt value of 469,863 and an equity value of 861,755. Your levered...

Your firm has a debt value of 469,863 and an equity value of 861,755. Your levered cost of equity is 0.12 and your cost of debt is 0.06. Your tax rate is 0.35. What is your weighted average cost of capital?

Expert Solution

Weighted average cost of capital

=(Weight of equity x cost of equity)+(cost of debtX weight of debt)(1- tax)

= (861755/(861755+469863)*12%)+(469863/(861755+469863)*6%(1-.35)

= (7.7657+1.37)

=9.1418%

jeff jeffy answered 2 years ago

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