Problem:
A firm has the following data: target capital structure of 50% debt and 50% common equity; tax rate = 40%; rd = 7.5%; and rs = 12%. Assume the firm will not be issuing new stock.
Required:
Question: What is this firm's WACC?
- 9.5%
- 12.0%
- 8.3%
- 10.0%
- 7.5%
Note: Provide thorough explanation of the given question.