Petra plc. has a current and target leverage ratio of 0.8, the finance cost from loans is 16 per cent, and a cost of equity of 20 per cent. The corporation tax rate is 35 per cent. What is the weighted cost of capital

Petra plc. has a current and target leverage ratio of 0.8, the finance cost from loans is 16 per cent, and a cost of equity of 20 per cent. The corporation tax rate is 35 per cent. What is the weighted cost of capital

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Definition Definition Amount of return a company generally pays to its equity investors. The cost of equity represents the compensation required by the market in lieu of owning the asset firm and simultaneously bearing the risk of ownership.

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