You own another business with Assets on the books valued at $400,000. These assets were financed with Debt and Equity, where the D/E ratio was 3.0. If the cost of debt capital was 7% and the cost of...



  1. You own another business with Assets on the books valued at $400,000. These assets were financed with Debt and Equity, where the D/E ratio was 3.0.  If the cost of debt capital was 7% and the cost of equity capital was 19%, then what was the WACC of the firm?


This is what I came up with. Is it correct?


[3.0 * 0.07 * (1-0)] + (3.0 * 0.19)


[0.21] + 0.57 = 0.78 or 78%



Jun 05, 2022
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