Answered

Find the best answers to your questions at Westonci.ca, where experts and enthusiasts provide accurate, reliable information. Join our platform to get reliable answers to your questions from a knowledgeable community of experts. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

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 visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.