Assume the following facts about a firm's financing in the next year: $\begin{array}{l}
\text { Proportion of capital projects funded by debt}&=45 \% \
\text {Proportion of capital projects funded by equity }&=55 \% \
\text {Return re ceived by bondholders }&=8.0 \% \
\text {Return received by stockholders }&=14.0 \%
\end{array}$ The weighted cost of capital of this project is:

Question

Quizplus · Accepted Answer

The weighted cost of capital (WACC) is calculated by multiplying the proportion of each source of capital by its respective cost and summing the results: $WACC = (0.45 \times 8\%) + (0.55 \times 14\%) = 3.6\% + 7.7\% = 11.3\%$.

Assume the Following Facts About a Firm's Financing in the Next