Andrea's Markets has debt of $318,200,equity of $493,500,an aftertax cost of debt of 6.80 percent,a cost of equity of 13.39 percent,and a tax rate of 34 percent.What is the firm's weighted average cost of capital?
A)9)90%
B)10.94%
C)9)87%
D)10.81%
E)10.05%

Question

Quizplus · Accepted Answer

V = $318,200 + $493,500 = $811,700 R_WACC = 0.1339($493,500 / $811,700)+ 0.068($318,200 / $811,700)= 0.1081,or 10.81%

Andrea's Markets Has Debt of $318,200,equity of $493,500,an Aftertax Cost