Solve for the weighted average cost of capital: $10.60 \% K _ { l } =$ cost of equity capital for a leveraged firm
$1 / 3 \lambda =$ debt-to-total-market-value ratio
$8.0 \% \quad i =$ before-tax borrowing cost
$40.0 \% \quad \tau =$ marginal corporate income tax rate

Question

Quizplus · Accepted Answer

The WACC is calculated as: WACC = E/V * Ke + D/V * Kd * (1 - Tc). Here, E/V = 2/3, D/V = 1/3, Ke = 10.60%, Kd = 8.0%, Tc = 40%. Plugging in these values gives WACC = (2/3 * 10.60%) + (1/3 * 8.0% * (1 - 0.40)) = 8.67%.

Solve for the Weighted Average Cost of Capital 10.60%Kl=10.60 \% K _ { l } =10.60%Kl​=

Solve for the Weighted Average Cost of Capital $10.60 \% K _ { l } =$