Company after-tax cost of debt

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1. The publicly traded debt of a company was recently quoted at 85% of face value. The market value of the company's equity is $13,600,000. The book values of the company's debt and equity are $4,000,000 and $11,500,000, respectively. Assume you were calculating this company's WACC. For the capital structure weights, what debt financing weighting woud you use for this company?

2. The capital structure weights for a company are 85% equity and 15% debt. The company's after-tax cost of debt is 8% and its cost of equity is 16%. What is this company's WACC?

Reference no: EM133111793

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