. What is the firm’s WACC?

| June 9, 2016

Question
Suppose a company will issue new 5 year debt with a face value of $1000 and a coupon rate of 8 percent, paid annually.If the issuing price is $1080 and the tax rate is 40 percent.what is the after-tax cost of debt?If the expected rate of return of the company’s common stock is 18 percent and the company’s target capital structure is 3:7. What is the firm’s WACC?

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