5) A firm has a target capital structure that consists of 60% of retained earnings and the rest in debt. The firm's cos
Posted: Fri Jul 01, 2022 7:51 am
5)
A firm has a target capital structure that consists of 60% ofretained earnings and the rest in debt. The firm's cost ofretained earnings is8.3%. The firm's cost of new debt issimilar to the yield to maturity of its existing bonds, which is6.1%. The firm's tax rate is 25%. Given thisinformation, and given that the firm has no preferred stock, whatis the WACC
A firm has a target capital structure that consists of 60% ofretained earnings and the rest in debt. The firm's cost ofretained earnings is8.3%. The firm's cost of new debt issimilar to the yield to maturity of its existing bonds, which is6.1%. The firm's tax rate is 25%. Given thisinformation, and given that the firm has no preferred stock, whatis the WACC