Question the up-and-down company has a cost of equity of, Ask an Expert

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Question: The Up-and-Down company has a cost of equity of 12.2%, a cost of debt of 8.6%, and a marginal tax rate of 40%. The current market value of its debt is $10 million and the current market value of its equity is $25 million.

a) What is Up-and-Down's weighted average cost of capital?

b) What would be the company's WACC if the amount of debt used was $20 million and equity was $15 million?

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Basic Finance, Finance

Category:- Basic Finance
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