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Annie Kavitha
Annie Kavitha, Master's Degree
Category: Business and Finance Homework
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Able Companys shareholders are receiving a 22.5%return and

Resolved Question:

Able Company's shareholders are receiving a 22.5%return and its bondholders get a 14% return. Based on a 50 percent debt/equity ratio, with no preferred stock and a 46 percent tax rate, find Able's weighted average cost of capital.


12.54 percent

14.47 percent

15.03 percent

17.52 percent
Submitted: 6 years ago.
Category: Business and Finance Homework
Expert:  Annie Kavitha replied 6 years ago.

HelloCustomer

 

WACC = 0.50 x 14% (1 - 0.46) + 0.50 x 22.5%

 

= 3.78% + 11.25%

 

= 15.03%

 

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