What Is the WACC for a Firm with Equal Amounts

question 8

Multiple Choice

What is the WACC for a firm with equal amounts of debt and equity financing, a 16% before-tax company cost of capital, a 35% tax rate, and a 10% coupon rate on its debt that is selling at par value?

• A)10.40%
• B)14.25%
• C)15.13%
• D)16.00% Adjustment for tax shield on debt =

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