General Studies · Cost of Capital
A retail chain is expanding and requires 100 million. It can raise debt at 12 percent or issue equity. The current market price of its share is 40, and it just paid a dividend of 2. Dividends are expected to grow at 8 percent. The company has a tax rate of 30 percent. If the company chooses a 50-50 debt-equity mix, what is the WACC?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 110.1 percent
- 212.5 percent
- 311.2 percent
- 410.9 percent✓
Correct answer
10.9 percent
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