A large multinational firm has decided to look for investment opportunities. To evaluate them, it must raise capital and determine the target weighted average cost of capital (WACC). 

Given the following assumptions, compute the WACC: 

Weights of 40% debt and 60% common equity (not preferred equity), 

35% tax rate, 

8% cost of debt, 

1.5 beta of the company, 

2% risk-free rate, and 

11% return on the market.

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC for the multinational firm you can use the fo... View the full answer