A firm has a 25% debt-to-equity ratio. The cost of debt is 6%. The company's asset beta is 1.4. Assume CAPM holds, the risk-free interest rate is 4% and market risk premium is 4%. The corporate tax rate is 35%. Interest payments on debt are tax exempt; dividends to shareholders are paid from after-tax funds. 

What is the weighted average cost of capital (WACC) for this firm？

Answer rating: 100% (QA)

Debttoequity ratio 25 Cost of debt Rd 6 Asset beta a 14 Riskfree int... View the full answer