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Question of the Week - Corporate Finance (WACC)
The market values of a firm’s capital are given below:
Total debt: $7 million
Outstanding preferred stock: $2 million
Outstanding common stock: $12 million
Its before-tax cost of debt is 8%, cost of common equity is 12% and cost of preferred stock is 9%. Assuming company’s marginal tax rate is 35%, what is the weighted average cost of capital (WACC) for the firm?
Question of the Week - Corporate Finance (WACC) 29 votes