GLOBAL CORP. HAS DEBT WITH A MARKET VALUE OF $80,000 AND COMMON EQ...

23. - BT THANH TOÁN QUỐC TẾ GLOBAL CORPORATE FINANCE DAP AN
Toán BT THANH TOÁN QUỐC TẾ GLOBAL CORPORATE FINANCE DAP AN
23. Global Corp. has debt with a market value of $80,000 and common equity with a market value of $120,000. The component costs of the capital structure for Global Corp. are 7.4 percent for bond and 16.4 percent for common equity. What is the weighted average cost of capital for Global Corp.? A. 7.4%. * B. 12.8%. C. 16.4%. D. 19.6%. E. 21.5%. Solution: use Equation (19-1): cost of capital = (120,000/200,000).164 + (80,000/200,000).074 = 12.8%