Dusit is financed 25% by debt yielding 8.4%. Investors require a return of 15.4% on Dusit’s equity.
a. What is the company’s weighted-average cost of capital if the corporate tax rate is 35%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Weighted-average cost of capital %
b. What would be the company’s cost of capital if it were exempted from corporate tax? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Weighted-average cost of capital %