Skolits Corp. has a cost of equity of 11.8 percent and an aftertax cost of debt of 4.44 percent. The company's balance sheet lists long-term debt of $340,000 and equity of $600,000. The company's bonds sell for 104.1 percent of par and market-to-book ratio is 2.80 times. If the company's tax rate is 39 percent, what is the WACC?

Skolits Corp. has a cost of equity of 11.8 percent and an aftertax cost of debt of 4.44 percent. The company's balance sheet lists long-term debt of $340,000 and equity of $600,000. The company's bonds sell for 104.1 percent of par and market-to-book ratio is 2.80 times. If the company's tax rate is 39 percent, what is the WACC?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 9P

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