$1.$ Consider a firm that has $32\%$ of debt, $9\%$ of preferred stock, and $59\%$ of equity. The rates of return for debt, preferred stock, and equity are $4\%,9\%,$ and $14\%,$ respectively. The corporate tax rate is $36\%.$ What is the weighted average cost of capital?  answer as a percentage .

 

 $2.$ Consider a firm that has a debt$-$equity ratio of $1.$ The rate of return for debt is $10\%$ and the rate of return for equity is $13\%.$ The corporate tax rate is $40\%.$ What is the weighted average cost of capital? Answer as a percentage and rounded to $2$ DECIMAL PLACES. Do not include the percentage sign in your answer. 

Answer rating: 100% (QA)

Ill solve both parts of the question regarding the Weighted Average Cost of Capital WACC Part 1 1 Id... View the full answer