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Estimate the weighted average cost of capital

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Laser Fun Ltd. is a laser quest company that operates over 10 facilities. The company has been listed for 20 years and over the past five years started to report that they are targeting a debt ratio of 50%. Over the past five years however, the debt ratio has never fell below 80% with no concrete indications or looming equity issues on the horizon. The company has a cost of equity of 10% and an after tax cost of debt of 8%.

a.) What would you estimate the weighted average cost of capital (WACC) of the company to be?

b.) Substantiate your answer briefly

Reference no: EM132554782

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