Voice River, Inc., is interested in estimating its WACC now that it is in its rapid-growth stage. Voice River has a $500,000, 10 percent interest, short-term bank loan; a $1.5 million, 12 percent interest, long-term debt issue; and $42 million

Voice River, Inc., is interested in estimating its WACC now that it is in its rapid-growth stage. Voice River has a $500,000, 10 percent interest, short-term bank loan; a $1.5 million, 12 percent interest, long-term debt issue; and $42 million in common equity. The venture is in the 35 percent income tax bracket.
A. Determine the after-tax costs of the bank loan and the long-term debt issue.
B. Calculate the WACC for Voice River, Inc., using the cost of common equity capital estimated in Problem 12.


This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!
Related Book For  answer-question

Entrepreneurial Finance

ISBN: 978-0538478151

4th edition

Authors: J . chris leach, Ronald w. melicher

Posted Date: August 13, 2012 22:12:13