Weighted-average cost of capital for a firm

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Reference no: EM131015446

1. The weighted-average cost of capital for a firm with a 65/35 debt/equity split, 8% pre-tax cost of debt, 15% cost of equity, and a 35% tax rate would be:

A. 8.63%.

B. 9.12%.

C. 10.45%.

D. 13.80%.

2. What is the pretax cost of debt for a firm in the 35% tax bracket that has a 10% aftertax cost of debt?

A. 5.85%

B. 12.15%

C. 15.38%

D. 25.71%

Reference no: EM131015446

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