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Sagot :
11.05% is the firm's WACC if there are no taxes.
What is WACC?
The weighted average cost of capital (WACC) is a method of calculating a firm's cost of capital that assigns a proportional weight to each category of capital.
A WACC computation takes into account all capital sources, including bonds, common stock, preferred stock, and any other long-term debt.
When calculating WACC, the cost of each capital source (debt and equity) is multiplied by the relevant weight by market value, and the results are then added up to reach the final result.
Based on the ratio of equity, debt, and preferred stock a company possesses, the WACC's goal is to calculate the cost of each component of the capital structure.
WACC = [(E/V) x Re] + [(D/V) x Rd x (1 - Tc)]
- E = equity market value
- Re = equity cost
- D = debt market value
- V = the sum of the equity and debt market values
- Rd = debt cost
- Tc = the current tax rate for corporations
WACC = [tex]\frac{16000}{21000}[/tex] ₓ [tex]12%[/tex] ₊ [tex]\frac{5000}{21000}[/tex] ₓ [tex]8[/tex]
WACC = 11.05%
Hence, 11.05% is the firm's WACC if there are no taxes.
To know more about WACC refer to: https://brainly.com/question/13884060
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