Weighted Asset Cost of Capital
1. A agency incurs $70,000 in curiosity bills every year. If the tax price of the agency is 30%, what's the efficient after-tax rate of interest expense for the agency?2. Epiphany is an all-equity agency with an estimated market worth of $400,000. The agency sells $225,000 of debt and makes use of the proceeds to buy excellent fairness. Compute the load in fairness and the load in debt after the proposed financing and repurchase of fairness.three. Excellent debt of Dwelling Depot trades with a yield to maturity of eight%. The tax price of Dwelling Depot is 30%. What's the efficient price of debt of Dwelling Depot?four. SIROM Scientific Options has $10 million of excellent fairness and $5 million of financial institution debt. The financial institution debt prices 5% per 12 months. The estimated fairness beta is 2. If the market threat premium is 9% and the risk-free price is three%, compute the weighted common price of capital if the agency's tax price is 30%.