A company is financed with 60% equity and 40% debt. The cost of equity of 12.5% and the cost of debt is 8.5%. The tax rate is 35%. What is the firm’s WACC?
What will be an ideal response?
WACC = .6(12.5) + .4(8.5)(1-.35) = 9.71%
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Fill in the blank(s) with the appropriate word(s).
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