5. Calculating WACC Croft Corporation has a target capital structure of 80percent common stock and 20 percent debt. Its cost of equity is 10.9percent, and the cost of debt is 4.7 percent. The tax rate is 21 percent. Whatis the company's WACC?

Step 1:Information;Cost of equity (Ke) = 0.109Weight of equity (We) = 0.80Cost of debt (Kd) =…

Answered: 5. Calculating WACC Croft Corporation…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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5. Calculating WACC Croft Corporation has a target capital structure of 80 percent common stock and 20 percent debt. Its cost of equity is 10.9 percent, and the cost of debt is 4.7 percent. The tax rate is 21 percent. What is the company's WACC?