PLUG in the numbers
4.5=500 x R x 2.5
divide both sides by 500
0.009=R x 2.5
divide 2.2 to both sides
R=.0036
In percent you have to multiply by 100 which is 0.36%
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%
Answer:
2 inches
Step-by-step explanation:
x= smallest
3x=largest
2x=medium
x+3x+2x=12
6x=12
x=2
so smallest is 2
largest is 6 (3x)
medium is 4 (2x)
2+6+4=12
