Average cost of capital when the after-tax cost of debt

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Reference no: EM132030376

1) What is the average cost of capital when the after-tax cost of debt is 8%, the cost of equity is 12%, and the ratio of equity to assets is 0.40?

2) Vicki and Danny Longhorn have $480,000 of assets and $200,000 of liabilities. Their tax rate is 31%, and their costs of debt and equity are 9% and 14%, respectively. What is Vicki and Danny's weighted average cost of capital?

Reference no: EM132030376

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