Taxes and WACC
Sixx AM Manufacturing has a target debt—equity ratio of 0.62. Its cost of equity is 20 percent, and its cost of debt is 11 percent. If the tax rate is 35 percent, what is the company's WACC?
a.14.33%
b.12.03%
c.12.07%
d.15.84%
e.15.08%
2. Jemisen's has expected earnings before interest...
Jemisen's has expected earnings before interest and taxes of $6,200. Its unlevered cost of capital is 14 percent and its tax rate is 34 percent. The firm has debt with both a book and a face value of $2,500. This debt has a 9 percent coupon and pays interest annually. What is the firm's weighted average cost of capital?
a.12.48 percent
b.13.87 percent
c.14.14 percent
d.13.60 percent
e.14.37 percent