a) Calculate the weighted average cost of capital using following information: Total Cost of debt = 4.40% . = 0.78 • Income tax rate Value of total debt = 16,595,600 OMR • Value of total debt = 6,595,325 OMR . Cost of equity %3D = 9.17% . b) Why weighted average cost of capital is important for capital structure decision making?

a) Calculate the weighted average cost of capital using following information: Total Cost of debt = 4.40% . = 0.78 • Income tax rate Value of total debt = 16,595,600 OMR • Value of total debt = 6,595,325 OMR . Cost of equity %3D = 9.17% . b) Why weighted average cost of capital is important for capital structure decision making?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 12MC: The cost of equity is _______. A. the interest associated with debt B. the rate of return required...

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Define each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt, rd(1 – T); after-tax cost of short-term debt, rstd(1 – T) Cost of preferred stock, rps; cost of common equity (or cost of common stock), rs Target capital structure Flotation cost, F; cost of new external common equity, re
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