Consider a firm financed using long-term debt with a value of $100 million and a before-tax cost of 4%. The firm also has 10 million shares outstanding at a price of $40/share. Assume the firm's cost of equity is 8% and its corporate tax rate is 20%.
a. What is the total value of the equity? What is the total firm value? 
b. What is the firm's WACC?

Answer rating: 100% (QA)

a The total value of equity can be calculated as follows Total value of equity ... View the full answer