What will the firms weighted average cost of capital wacc


U.S. Robotics Inc. has a current capital structure of 30% debt and 70% equity Its current before-tax cost of debt is 8%, and its tax rate is 35%. It currently has a levered beta of 1.15. The risk-free rate is 3.5%, and the risk premium on the market is 7%. U.S. Robotics Inc. is considering changing its capital structure to 60% debt and 40% equtiy. Increasing the firm's level of debt will cause its before-tax cost of debt to increase to 10%. Use the Hamada equation to unlever and relever the beta for the new level of debt. What will the firm/s weighted average cost of capital (WACC) be if it makes this change in tis capital strucutre?

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Financial Management: What will the firms weighted average cost of capital wacc
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