Calculate a Firm's WACC Given That the Total Value of the Firm

question 31

Multiple Choice

Calculate a firm's WACC given that the total value of the firm is $2,000,000, $600,000 of which is debt, the cost of debt and equity is 10% and 15% respectively, and the firm pays no taxes:

• A)9.0%
• B)11.5%
• C)13.5%
• D)14.4% WACC = .10(600,000/2,000,0000) + .15(1,400,000/2,000,000)
• = )10(.3) + .15(.7)

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