Cost of debt Tax Rate Cost of equity Debt/EV Part a. Source Debt Equity Part b. Source Debt Equity PROBLEM 4-3 Given 6% 30% 14% 20% Solution Proportion After-tax cost Product Solution Legend ■ Value given in problem Formula/Calculation/Analysis required Qualitative analysis or Short answer required = Goal Seek or Solver cell = Crystal Ball Input = Crystal Ball Output Solution WACC Proportion After-tax cost Product WACC

Cost of debt Tax Rate Cost of equity Debt/EV Part a. Source Debt Equity Part b. Source Debt Equity PROBLEM 4-3 Given 6% 30% 14% 20% Solution Proportion After-tax cost Product Solution Legend ■ Value given in problem Formula/Calculation/Analysis required Qualitative analysis or Short answer required = Goal Seek or Solver cell = Crystal Ball Input = Crystal Ball Output Solution WACC Proportion After-tax cost Product WACC

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 1Q: Define each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt,...

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