Using the WACC in practice: Droz's Hiking Gear Ltd has found that its equity capital shares have a beta equal to 1.5 while the risk-free return is 8 percent and the expected return on the market is 14 percent. It has 7-year maturity bonds outstanding with a price of $767.03 that have a coupon rate of 7 percent. If the company is financed with $120,000,000 of ordinary shares (market value) and $80,000,000 of debt, then what is the after-tax weighted average cost of capital for Droz's if it is subject to a 35 percent company tax rate?
A) 10.20%
B) 11.76%
C) 11.88%
D) 13.32%

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The Answer of Using the WACC in practice: Droz's Hiking Gear Ltd has found that its equity capital shares have a beta equal to 1.5 while the risk-free return is 8 percent and the expected return on the market is 14 percent. It has 7-year maturity bonds outstanding with a price of $767.03 that have a coupon rate of 7 percent. If the company is financed with $120,000,000 of ordinary shares (market value) and $80,000,000 of debt, then what is the after-tax weighted average cost of capital for Droz's if it is subject to a 35 percent company tax rate?
A) 10.20%
B) 11.76%
C) 11.88%
D) 13.32%

Using the WACC in Practice: Droz's Hiking Gear Ltd Has