Answered: Sixx AM Manufacturing has a target…

Sixx AM Manufacturing has a target debt-equity ratio of 0.65. its cost of equity is 15%, and its cost of debt is 9 percent. If the tax rate is 35%, what is the company's WACC?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 1P

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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

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Sixx AM Manufacturing has a target debt-equity ratio of 0.65. its cost of equity is 15%, and its cost of
debt is 9 percent. If the tax rate is 35%, what is the company's WACC?

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