Benjamin Manufacturing has a target debt-equity ratio of .62. Its cost of equity

Question

Benjamin Manufacturing has a target debt-equity ratio of .62. Its cost of equity is 14.3 percent, and its cost of debt is 9.3 percent.

If the tax rate is 38 percent, what is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Benjamin Manufacturing has a target debt-equity ratio of .62. Its cost of equity is 14.3 percent, and its cost of debt is 9.3 percent.

If the tax rate is 38 percent, what is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Cost of equity 14.30% 14.30% After tax cost of debt 5.77% 9.3%*(1-38%) Equity weight        0.62 1/1.62 Debt weight        0.38 0.62/1.62 WACC 11.03%

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