FIN370 Weighted Average Cost of Capital

FIN370 Weighted Average Cost of Capital - Weighted Average...

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Weighted Average Cost of Capital 1 Weighted Average Cost of Capital FIN/370 Be sure to read Chapters 21 of Mayo, H.B. (2007), Basic finances: An introduction to financial institutions, investments, Individual Assignment – Weighted Average Cost of Capital Be sure to cite any references you use to solve these questions.
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Weighted Average Cost of Capital 2 1. The after-tax cost of debt and the cost of equity as follows for a firm at various percentages of debt in its capital structure. Calculate the firm’s weighted average cost of capital at each combination of debt and equity: Debt / Assets After-Tax Cost of Debt Cost of Equity Weighted Average Cost of Capital 0% 6% 10% 10.00% 10% 6% 10% 9.60% 20% 7% 10% 9.40% 30% 8% 11% 10.10% 40% 9% 13% 11.40% 50% 10% 14% 12.00% 60% 12% 16% 13.60% WACC (k) = w d k d + w e k e , where k d represents cost of debt, k e represents cost of equity, and w represents the weight by which they were used. Debt /
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FIN370 Weighted Average Cost of Capital - Weighted Average...

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