What is the firm's weighted average cost of capital? A firm is financed with 40% risk-free debt and 60%equity. The risk-free rate is 7%, the firm's cost ofequity capital is 18%, and the firm's marginal taxrate is 35%. What is the firm's weighted average costof capital?

The Weighted Average Cost of Capital (WACC) is calculated using the formula:Where:D/V= proportion of…

Answered: A firm is financed with 40% risk-free…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

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A firm is financed with 40% risk-free debt and 60% equity. The risk-free rate is 7%, the firm's cost of equity capital is 18%, and the firm's marginal tax rate is 35%. What is the firm's weighted average cost of capital?