A firm requires an investment of $30,000 and borrows $15,000 at 7%. If the return on equity is 19%, what is the firm's pretax WACC?
A) 13%
B) 6.5%
C) 15.6%
D) 18.2%

Question

Quizplus · Accepted Answer

A) Pretax WACC = r_E 11ea84dc_f507_9e19_9a63_0790706aed4f_TB1316_11_TB1316_11 + r_D 11ea84dc_f507_9e1a_9a63_5352d85c2d82_TB1316_11_TB1316_11 Pretax WACC = 19 % × [$15,000 / ($15,000 + $15,000] + 7% × [$15,000 / ($15,000 + $15,000] = 13%

A Firm Requires an Investment of $30,000 and Borrows $15,000