Answer:
12
Step-by-step explanation:
if each bar is cut into 3 pieces, then we multiply 4 by 3 to get 12.
Remember you can do anything to an equaiton as long as you do it to both sides
-x=4-3x
add 3x both sides
3x-x=4+3x-3x
2x=4+0
2x=4
divide 2
2x/2=4/2
2/2x=2
1x=2
x=2
2/3 is your answer to the question
Beta= 1.3
Debt to equity ratio= 0.4
Market rate of return= 11.6%
= 11.6/100
= 0.116
Tax rate= 32%
= 32/100
= 0.32
Risk free rate= 3.3%
= 3.3/100
= 0.033
Pretax cost of debt= 7.2%
= 7.2/100
= 0.072
The firm's WACC can be calacluated as follows
RS= 0.033+1.3(0.116-0.033)
= 0.033+1.3(0.083)
= 0.033+0.1079
= 0.1409
WACC= (1/1.4)(0.1409)+(2/1.4) (0.072)(1-0.32)
= (0.7142)(0.1409) + (1.4285)(0.072)(0.68)
= 0.1006+0.0699
= 0.1705(100)
= 17.05%
Hence the firm's WACC is 17.05%
