Answer:
The weighted average cost is 24.50%
Step-by-step explanation:
The weighted average cost of capital ( WACC ) is the cost incurred to finance a project or business as a whole. This rate based on the weights of each financing option.
Use the following formula in order to calculate the weighted average cost of capital
Weighted average cost of capital ( WACC ) = ( Weight of equity financing x Cost of Equity financing ) + ( Weight of Debt financing x Cost of Debt financing )
Where
Weight of equity financing = 25%
Weight of Debt financing = 100% - 25% = 75%
Cost of Equity financing = 11%
Cost of Debt financing = 29%
Placing values in the formula
Weighted average cost of capital ( WACC ) = ( 25% x 11% ) + ( 75% x 29% )
Weighted average cost of capital ( WACC ) = 2.75% + 21.75%
Weighted average cost of capital ( WACC ) = 24.50%