Discover answers to your questions with Westonci.ca, the leading Q&A platform that connects you with knowledgeable experts. Get quick and reliable solutions to your questions from knowledgeable professionals on our comprehensive Q&A platform. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.
Sagot :
The company's cost of capital with rate of return on the equity is 15% and debt is 5% is :
11 %.
What is cost of capital?
- The cost of capital is the minimum rate of return or profit that a company must achieve before it can generate value. The accounting department of a company calculates it to determine financial risk and whether an investment is justified.
Here given,
Cable Company's equity is worth $60 million in the market.
and its debt is worth $40 million in the market.
If the required rate of return on equity = 15%
And the required rate of return on debt = 5%,
We have to compute the firm's cost of capital (No taxes are assumed.)
Cost of capital = (40/100)(5%) + (60/100)(15%)
= 11%
Cost of capital for the company is 11%.
To learn more about cost of capital refer to :
https://brainly.com/question/8287701
#SPJ4
Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.