Axis Manufacturing Company, Inc. (AXCI), a very small company in terms of market capitalization, has total assets of €3,000,000 financed by 40% with debt capital. The cost of debt is 7.5% before taxes and cost of equity is 12.5%. The company has earnings before interest and taxes (EBIT) of €300,000 and a tax rate of 30%. Assume that that initially AXCI equity is selling for a book value or €3,000,000 with 150,000 shares outstanding. 

What is the weighted average cost of capital for AXCI?

Answer rating: 100% (QA)

To calculate the weighted average cost of capital WACC for AXCI we need to consider the prop... View the full answer