Finance cost of capital : determination of weighted average cost by ClassOf1


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									              Sub: Finance                                                                            Topic: Cost of Capital

              Determining cost of equity and weighted average cost of capital?

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              Suppose a firm has no debt and $100,000,000 in equity capital. It has a tax rate of 40%, a required rate
              of return (by investors) of 9.5% and a β = 1.23. The firm can issue $50,000,000 of debt at a rate of 7.2%.
              The risk free rate is 2% and the e
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