Capital structure-weighted average cost of capital

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Reference no: EM131864999

RON Ltd has the following capital structure components:

- Five million shares issued with a current market price of 8. Equity holders require a 13% return.

- $10 million face value of Corporate bonds outstanding. These bonds pay an annual coupon of 6% and currently trade at a yield to maturity of 6%.

If the firm faces a corporate tax rate of 30%, compute RON Ltd's Weighted Average Cost of Capital (WACC).

Enter your answer in decimal form to FOUR decimal places. For example 10.34%, would be entered as 0.1034

Reference no: EM131864999

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