Question: Problem 1 (20%) Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of ra =

Problem 1 (20%) Empire Electric Company (EEC) uses only debt and

Problem 1 (20%) Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of ra = 9% as long as it finances at its target capital structure, which calls for 35% debt and 65% common equity. Its required rate of return is 15%. EEC's tax rate is 40%. Calculate EEC's weighted average cost of capital. Show calculations

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