Answered: What is the WEIGHTED AVERAGE COST OF…

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Finance

What is the WEIGHTED AVERAGE COST OF CAPITAL

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

JJ Alfred Ltd. Is an energy company and their financing comes from 60% equity and 40% debt, risk free rate is 3% and expected market rate is 10%, loan interest is 8% and tax deductible under a tax rate of 28%, beta (β) is 1.4 showing higher risk.

What is the WEIGHTED AVERAGE COST OF CAPITAL

a. 9.3%

b. 9.2%

c. 9.1%

d. 9.0.%

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JJ Alfred Ltd. Is an energy company and their financing comes from 60% equity and 40% debt, risk free rate is 3% and expected market rate is 10%, loan interest is 8% and tax deductible under a tax rate of 28%, beta (β) is 1.4 showing higher risk. What is the WEIGHTED AVERAGE COST OF CAPITAL
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