Question: Company A s total capital consists of 150 million in debt

Company A's total capital consists of $150 million in debt, $50 million in leased assets, no outstanding preferred stock, $500 million in common stock, and $300 million in retained earnings. It’s after tax specific costs are 7% for the debt, 8% for the leases and 9% for the equity.
A. Find the WACC - Weighted Average Cost of Capital?
B. If Company A wanted to lower its WACC what could it do?
C. Why is it important for the company to know its WACC?

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  • CreatedSeptember 19, 2013
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