AFP
CTP · Question #70
(Topic 1) If a company has $126 million in debt at an average cost of 7% and $234 million in equity at a cost of 11%, what is its weighted average cost of capital, assuming a marginal tax rate of…
The correct answer is A. 8.7%. See the full explanation below for the reasoning.
Question
- (Topic 1)
If a company has $126 million in debt at an average cost of 7% and $234 million in equity at a cost of 11%, what is its weighted average cost of capital, assuming a marginal tax rate of 35% and a risk-adjusted rate of 13%?
Options
- A8.7%
- B9.6%
- C10.0%
- D10.9%
How the community answered
(45 responses)- A71% (32)
- B16% (7)
- C9% (4)
- D4% (2)
Community Discussion
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