Weighted Average Cost of Capital Assignment | Homework For You
June 3rd, 2020
Three firms (A, B, and C) are identical firms in all aspects except for their capital structure (i.e. they have exactly the same assets/business but different capital structures). Their capital structures are as follows: A has 20% debt and 80% equity; B has 30% debt and 70% equity; C has 40% debt and 60% equity. The unlevered cost of equity is 10%. Cost of debt is 6%. The corporate tax rate is 20%. Which firm has the lowest WACC?
O A. A O B. B O C. C O D. All three firms have the same WACC. Get Finance homework help today