The WACC for a firm is 19.75 percent. You know that the firm is financed with $75 million of equity and $25 million of debt. The cost of debt capital is 7 percent. What is the cost of equity for the firm? Assume the firm pays no tax..

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The Weighted Average Cost of Capital (WACC) is calculated as follows: WACC = (E/V) * Re + (D/V) * Rd * (1 - Tc), where E is the market value of the equity, D is the market value of the debt, V is the total value of financing (E + D), Re is the cost of equity, Rd is the cost of debt, and Tc is the corporate tax rate. Given that the firm pays no tax, the formula simplifies to WACC = (E/V) * Re + (D/V) * Rd.Given: WACC = 19.75%, E = $75 million, D = $25 million, Rd = 7%, and Tc = 0%.First, calculate V: V = E + D = $75 million + $25 million = $100 million.Then, plug the values into the simplified WACC formula and solve for Re (the cost of equity):19.75% = ($75/$100) * Re + ($25/$100) * 7%19.75% = 0.75 * Re + 0.25 * 7%19.75% = 0.75 * Re + 1.75%18% = 0.75 * ReRe = 18% / 0.75 = 24%Therefore, the cost of equity for the firm is 24%.

The WACC for a Firm Is 19