Considering an expansion in their operations

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Reference no: EM131445670

Barbow Enterprises, Inc., is considering an expansion in their operations. One of the first items they want to examine is their cost of capital. According to the accounting department, the following items and their respective costs have been identified: The cost of Common Equity: 15% The before tax cost of debt: 12% No Preferred stock They have also calculated the marginal tax rate to be 40% and the stock sells at its book value. Barbow Enterprises Inc. Balance Sheet Assets Liabilities and Owners' Equity Cash $240 Long Term Debt $2,304 Accounts Receivable 480 Equity 3,456 Inventories 720 Net P&E 4,320 Total Assets $5,760 Total Liabilities and owners' Equity $5,760 Required: Calculate Barbow’s after-tax weighted average cost of capital, using the data in the balance sheet above.

Reference no: EM131445670

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