The company has equity of 35,000 and interest-bearing debt of 15,000. The interest premium on the company's new loans (ie the interest margin) is 0.5%, the risk-free interest rate is 4.5%, and the general market risk premium is 4%. The beta calculated from the financial statements describing the company's risk is 0.8, taxes are not taken into account. Please indicate your answer to two decimal places.

a) Calculate the average cost of capital for a company, WACC?

(b) The company decides to change its capital structure by taking out a new loan of EUR 20 000. What is the return on equity requirement with a changed capital structure?

Answer rating: 100% (QA)

a To calculate the Weighted Average Cost of Capital WACC for the company we need to consider the cos... View the full answer