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21 August, 03:09

The wacc for a firm is 13.00 percent. you know that the firm's cost of debt capital is 10 percent and the cost of equity capital is 20%. what proportion of the firm is financed with debt? assume there are no taxes.

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  1. 21 August, 04:25
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    Answer: 70%

    x Debt = Y, x Equity = (1 - Y) k Firm = x Debt k Debt + x Equity k Equity = = > 0.13 = (Y x 0.1) + ((1 - Y) x 0.20) = = > Y = 0.7
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