A company is 40 financed by risk-free debt the interest

Reference no: EM13598731

A company is 40% financed by risk-free debt. The interest rate is 10%, the expected market risk premium is 8%, and the beta of the company's common stock is .5.

Risk Free Debt Interest Rate Market Risk Premium Beta Taxes
40% 10% 8% 0.5 35%

a. What is the company cost of capital?
b. What is the after-tax WACC, assuming that the company pays tax at a 35% rate?

Reference no: EM13598731

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