the target weighted average cost of capital for Felicia & Fred

Felicia & Fred
June 29, 2019
WACC
June 29, 2019

 Determine the target weighted average cost of capital for Felicia & Fred, given following assumptions:

  • Weights of 30% debt and 70% common equity (no preferred equity)
  • A 35% tax rate
  • The cost of debt is 9%
  • The beta of the company is 1.2
  • The risk free rate is 2%
  • The return on the market is 12%
 
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