Business, 16.04.2020 00:15, soccerjessie6846

Desires to maintain a capital structure of 80% equity and 20% debt. They currently have an effective tax rate of 30%. The company’s cost of equity capital is 12%. To obtain their debt financing, they issue bonds with an interest rate of 10%. What is the company’s weighted average cost of capital?

a. 8%
b. 10.4%
c. 11%
d. 11.6%

Answers: 2

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Desires to maintain a capital structure of 80% equity and 20% debt. They currently have an effective...