Give the data: Cost of equity: 5% Cost of debt: 7% %debt: 60% %Equity: 40% what...

Give the data:

Cost of equity: 5%

Cost of debt: 7%

%debt: 60%

%Equity: 40%

what is the weighted average cost of capital of this company?

A: 3.7%

B: 5.9%

C: 6.2%

D: 4.0%

Solutions

Expert Solution

WACC = (Weight of common stock * Cost of common equity) + (Weight of debt * Cost of debt)

WACC = (0.40 * 0.05) + (0.60 * 0.07)

WACC = 0.062 OR 6.2%

jeff jeffy answered 1 year ago

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