A company has a market value of $500 million. It has an equity market value of $200
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A company has a market value of $500 million. It has an equity market value of $200 million, a long-term debt market value of $150 million, and a short-term debt market value of $150 million. The cost of equity is 12%, the cost of long-term debt is 8%, and the cost of short-term debt is 6%. The marginal tax rate is 35%.
What is the weighted average pre-tax cost of capital (WACC) for this company? (show the formula)
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