2B4B ANGELA COMPANY’S CAPITAL STRUCTURE CONSISTS ENTIRELY OF LONG-TER...

138.

CSO: 2B4c

LOS: 2B4b

Angela Company’s capital structure consists entirely of long-term debt and common

equity. The cost of capital for each component is shown below.

Long-term debt

8%

Common equity

15%

Angela pays taxes at a rate of 40%. If Angela’s weighted average cost of capital is