WACKO Ltd. has $30 million in debt, equity of $55 million, an after-tax cost of debt of 6 percent, a cost of equity of 9 percent, and a tax rate of 25 percent. The firm's weighted average cost of capital (WACC) is

weighted average cost of capital =  7.4%

Explanation:

given data

debt = $30 million

equity = $55 million

after-tax cost of debt = 6 percent

cost of equity = 9 percent

tax rate = 25 percent

solution

we get here weighted average cost of capital that is express as

weighted average cost of capital = weighted Cost of equity + weighted Cost (After tax) of debts.  .....................1

here weighted Cost of equity is

weighted Cost of equity = weight × Specific cost % (after tax)  ...........2

weighted Cost of equity =   × 9 %

weighted Cost of equity = 5.82%

and

weighted Cost (After tax) of debts is

weighted Cost (After tax) of debts = × 6 (1 - 0.25)

weighted Cost (After tax) of debts = 1.58 %

so

weighted average cost of capital = 5.82%  + 1.58 %

weighted average cost of capital =  7.4%

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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