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wacc problem 3

# wacc problem 3 - (A Assets = \$100 Debt Equity Debt = \$10...

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(A) Assets = \$100 Debt & Equity Debt = \$10 Equity = \$90 Calculating Weighted Average Cost of Capital: Debt/Assets Cost of Debt Cost of Equity Cost of Capital 0% 8% 12% 20% 10% 8% 12% 11.6% 20% 8% 12% 11.2% 30% 8% 13% 11.5% 40% 9% 14% 12% 50% 10% 15% 12.5% 60% 12% 16% 13.6% WACC = (After tax Cost of Debt * Proportion of Debt financing) + (Cost of equity * Proportion of equity financing) Debt/Assets = 10% Debt = 0.10 Equity = 0.90 WACC = (0.08*0.10+0.12*0.90) = 11.6% Debt/Assets = 20% Debt = 0.2

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Equity = 0.8
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wacc problem 3 - (A Assets = \$100 Debt Equity Debt = \$10...

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