Answered

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Your firm uses half debt and half equity. The shareholders need to earn 20%. The firm can borrow at 5%. The risk free rate is 2%. The tax rate is 40%. Find the weighted average cost of capital.

Sagot :

Answer:

11.5%

Explanation:

WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)

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