Problem: A firm has a total market value of $10 millions and debt has a market value of $4 millions. What is the after-tax weighted average cost of capital if the before - tax cost of debt is 10%, the cost of equity is 15% and the tax rate is 35%?
A. 13%
B. 11.6%
C. 8.75%
D. None of the given answers
Given the following data:
Cost of debt = rD = 6%
Cost of equity = rE = 12.1%
Marginal tax rate = 35%
And the firm has 50% debt and 50% equity...
Calculate the after-tax weighted average coat of capital (WACC):
A. 8%
B. 7.1%
C. 9.05%
D. None of the given values