Weighted average cost of capital

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Feb 4, 2007, 06:46 PM

ivory5130

Junior Member

Join Date: Jan 2007

Posts: 62

Weighted average cost of capital

Please help.

I can't figure out the weighted average cost of capital for this problem.
The current interest rate on new debt is 9%. The firm's marginal tax rate is 40%. It's capital structure, considered to be optimal, is as follows:
Debt 104,000,000
Common equity 156,000,000

Please explain to me how I am to figure out the answer.

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