A company has 30% debt and 70% equity,' in its target capital structure, and a corporate tax
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Question:
A company has 30% debt and 70% equity,' in its target capital structure, and a corporate tax rate of 35%. If it has to pay 10% interest annually on its debt, and the beta Of its stock is 1.5, what is the cost Of capital for this company? Assume the risk-free rate as 6% per annum.
Expert Answer:
To calculate the cost of capital for the company we need to consider the cost of debt and the cost o... View the full answer
Related Book For 
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
