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WACC of company A is 12. Cost of equity and pre-tax cost of debt are 13.5% and 8.8% respectively. Company pays tax at 35%. Find the target debt to...

WACC of company A is 12.50%. Cost of equity and pre-tax cost of debt are 13.5% and 8.8% respectively. Company pays tax at 35%. Find the target debt to equity ratio.

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solved WACC = (After tax cost of debt*weight of debt) + (Cost of equity*weight of equity) but WACC is given =12.50% cost of... View the full answer

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Suppose to proportion of equity is x And proportion of debt is y or 1-x Wacc =( proportion of equity *cost of... View the full answer

Ke = COST of equity = 13.5 Ki = COST of debt = 8.80 * 0.65 = 5.72 Now WACC = Ke * % of equity + ki * %... View the full answer

Debt/Equity Let debt =X Equity =y X+Y =1 Y =1-X WACC =Weight of Equity * cost of Equity +... View the full answer

Here is a detailed explanation... View the full answer

Weighted average cost of capital = Percentage of equity financing * Cost of... View the full answer

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