Unformatted text preview: e equity market riskpremium? What is the cost of equity? Question 3: Cost of debt
Question Should we use a before-tax or after-tax rate for the
cost of debt? Why?
cost What is the applicable tax rate? What is the pre-tax cost of debt? Tables 1 and 2 Generally speaking, how to find cost of debt? Question 3: Calculation of WACC
Question Cost of debt = 6.6% Cost of equity = 11.58% Additional info needed
– B/(B+S) = 42.2%
– Tc=40% WACC
WACC Question 4: Calculation of WACCs for
Midland’s Should Midland compute a different WACC for
each division? Why / why not?
each Question 5:...
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- Fall '11
- Calculation, Modigliani-Miller theorem, Weighted average cost of capital