Sources of capital available-Calculate WACC

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Corporation has the following capital structure: 10000 EUR of own capital and 20000 EUR of borrowed capital. This is optimal capital structure for this corporation. Cost of own capital=10%, cost of borrowed capital (before tax) =8.7%. Corporation needs to increase its total capital to 55000 EUR. There are following sources of the capital available:

1) Depreciation max. 10000 EUR,

2) public offering of new stock -unlimited and cost of this source is 12%,

3) new credit -unlimited and cost of this source (before) tax is 10%. Calculate WACC.

Reference no: EM132068856

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