ou own another business with Assets on the books valued at $400,000. These assets were financed with Debt and Equity, where the D/E ratio was 3.0. If the cost of debt capital was 7% and the cost of equity capital was 19%, then what was the WACC of the firm? This is what I came up with. Is it correct? [3.0 * 0.07 * (1-0)] + (3.0 * 0.19) [0.21] + 0.57 = 0.78 or 78%

ou own another business with Assets on the books valued at $400,000. These assets were financed with Debt and Equity, where the D/E ratio was 3.0. If the cost of debt capital was 7% and the cost of equity capital was 19%, then what was the WACC of the firm? This is what I came up with. Is it correct? [3.0 * 0.07 * (1-0)] + (3.0 * 0.19) [0.21] + 0.57 = 0.78 or 78%

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 7EB: Assume Plainfield Manufacturing has debt of $6,500,000 with a cost of capital of 9.5% and equity of...

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