Weighted Cost of Capital (After Tax)	After Tax.	Ignore Flotat. Cost		Tax Rate = 35%
Capital Required = $20 M Over a 10-year period
		Weights	Cost %	Weighted  Cost	Weighted Cost      After tax
Financing	$M Value	$Value/Total	See class example	Columns 3x4	WACC (after tax)
debt	8.00		8.48
preferred stock	3.00		6.88
new common stock	5.00		9.22
retained earnings	4.00	________	9.00		_____________
TOTAL	20.00	Total   1.00			?___________?

 

Required :

a.      What is the after tax weighted average cost of Capital (WACC at)     ______ %

b.     Show the process as best you can, using the above table

c.      Explain what the % means in terms of capital budgeting decisions.

Answer rating: 100% (QA)

After Tax Ignore Flotat Cost Tax Rate 35 Capital Required 20 M Over a 10year period Weights Cost Wei... View the full answer