Question

Calculate WACC?

Given corporate tax 35%.

Debt MV 20m (RRR6%)

Preferred stock MV 10m (RRR8)

Common stock MV 50m (RRR12)

Answer 1

Corporate tax rate can be defined as that rate at which a corporate or a firm is required to pay taxes to the government of a country. These taxes serve as revenue for the government and is used for expenses.

WACC can be calculated as follows:

Therefore, WACC is 9.475%