The following data are available from a balance sheet: Type of Capital Total $
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Question:
The following data are available from a balance sheet: | ||
Type of Capital | Total $ M | Cost of Capital |
Debt | 30 | 6% |
Preferred stock | 10 | 8% |
Common stock | 40 | 10% |
Total Capital | 80 |
a. The weighted average cost of capital (WACC), ignoring tax deductibility, using 6 decimals, is ?
b. Assume the cost of debt is now tax deductible at 30%. All other info is the same. In this case, the weighted average cost of capital WACC?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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