Final answer:
The company's WACC is 11.69% when calculated using the given cost of debt, cost of equity, and tax rate. However, this calculated WACC does not match any of the provided answer choices, indicating that there may be a need to double-check the calculations or the values provided.
Step-by-step explanation:
The company's weighted average cost of capital (WACC) can be calculated by using the formula: WACC = (E/V) * Re + (D/V) * Rd * (1 - Tc), where E is the market value of the equity, D is the market value of the debt, V is the total value of capital (E + D), Re is the cost of equity, Rd is the cost of debt, and Tc is the corporate tax rate.
In this case, the equity portion is 40% and the cost of equity is 18%, while the debt portion is 60% and the cost of debt is 11%. The tax rate is 32%. Plugging in these values gives us:
WACC = (0.40 * 0.18) + (0.60 * 0.11) * (1 - 0.32)
WACC = 0.072 + 0.066 * 0.68
WACC = 0.072 + 0.04488
WACC = 0.11688 or 11.69% when rounded to the nearest hundredth of a percent.
None of the provided answer options (A, B, C, or D) matches the calculated WACC of 11.69%. It's important to double-check the calculations and the values provided to ensure they are entered correctly.