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Kelso's has a debt-equity ratio of 0.6 and a tax rate of 35 percent. The cost of equity is 14.5 percent and the after tax cost of debt is 4.8 percent. What is the weighted average cost of capital

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abiolataiwo2015

Answer:

10.86 percent

Explanation:

Calculation to determine the weighted average cost of capital

Weighted average cost of capital = (1/1.6) (0.145) + (0.6/1.6) (0.048)

Weighted average cost of capital = (0.625) (0.145) + (0.375) (0.048)

Weighted average cost of capital = 10.86 percent

Therefore Weighted average cost of capital is 10.86 percent

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