Answered

Welcome to Westonci.ca, where finding answers to your questions is made simple by our community of experts. Discover the answers you need from a community of experts ready to help you with their knowledge and experience in various fields. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

You are analyzing the cost of capital for a firm that is financed with 65 percent equity and 35 percent debt. The cost of debt capital is 8 percent, while the cost of equity capital is 20 percent for the firm. What is the overall cost of capital for the firm? Select one: O a. 12.2% b. 15.8 % c. None of these O d. 20.2%

Sagot :

15.8 % will be the overall cost of capital for the firm at 8% debt capital and 20% equity capital.

Weight of equity = 65%

Cost of Capital of equity = 20%

overall cost of equity = Weight of equity x Cost of Capital of equity

                                   =  65% x 20%

                                   = 13%

Weight of debt= 35%

Cost of Capital of debt = 8%

overall cost of debt = Weight of debt x Cost of Capital of debt

                                 = 35% x 8%

                                 = 2.80%

overall cost of capital for the firm = overall cost of equity + overall cost of  

                                                                                                    debt

                                                        = 13% + 2.80%

                                                        = 15.8%

the overall cost of capital for the firm is 15.8%

learn more about cost of capital here

https://brainly.com/question/16031467

#SPJ4

We appreciate your time. Please revisit us for more reliable answers to any questions you may have. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.