Question

8.
A company has a financial structure where equity is 70% of its total debt plus
equity. Its cost of equity is 10% and gross loan interest is 5%. Corporation tax is
paid at 30%. What is the company's weighted average cost of capital (WACC)?

Answer 1

Answer:

A company has a financial structure where equity is 70% of its total debt plus

equity. Its cost of equity is 10% and gross loan interest is 5%. Corporation tax is

paid at 30%. What is the company's weighted average cost of capital (WACC)?

Explanation:

Answer 2

Explanation:

cost of debt is equal to kd-tax i.e. 5-30%