Food and Beverage issues only common stock and coupon bonds. The firm has a debt-equity ratio of 0.55. The cost of equity is 16.3% and the pre-tax cost of debt is 9.9%. The firm's tax rate is 34%.


i. What is the capital structure weight of the firm's equity and debt? [10 marks]

ii. What is firm's WACC (weighted average cost of capital)?

Answer rating: 100% (QA)

i To calculate the capital structure weight of the firms equity and debt we need to use the debtequi... View the full answer