Cost of equity of an un-geared company is 20%. Cost of debt capital is 12%. After restructuring,
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Cost of equity of an un-geared company is 20%. Cost of debt capital is 12%. After restructuring, the company has decided to have 60% equity and 40% debt. The corporation tax at a rate of 33%
i. Calculate the cost of equity after gearing.
ii. Calculate the WACC, allowing for taxation.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
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