Question

Take It All Away has a cost of equity of 10.60 percent, a pretax cost of debt of 5.31 percent, and a tax rate of 21 percent. The company's capital structure consists of 70 percent debt on a book value basis, but debt is 30 percent of the company's value on a market value basis. What is the company's WACC

Answer 1

WACC = 8.04%

Step-by-step explanation:

WACC = .62(10.96%) + .38(5.46%)(1 − .40)WACC = 8.04%