edes ting of nuclear bombs was halted internationaly i reaction. Duo to soarin 1

Question

edes ting of nuclear bombs was halted internationaly i reaction. Duo to soarin 1902. he Oep/doc developed a laser systen that allows engineers t nuclear o simulate (in a laboratory) conditions in a thermo- cost of the project increased at undertook an investigation an average rate of 2% and discovered that the estimated development a congressional committee per two-months what is the expected cost today? hs over a S-year period. If the original cost was estimated to be $2.7 billion 5 yes The expected cost today is $ bi lon 6. Your boss, whose background is in financial planning, is concerned about the company's high weighted average cost of capital (WACC) of 29%. He has asked you to determine what combination of debt-equity financing would lower the company's WACC to 15%. If the cost of the company septi capital is 6% and the cost of debt financing is 30%, what debt-equity mix would you recommend? The debt-equity mix should be

Explanation / Answer

Let the debt-equity mix be a:(1-a)

Then, 26*a + 6*(1-a) = 17 which gives a= 11/20 and

(1-a) = 9/20.

Thus, the required debt - equity mix = 55%:35%.

Thanks!

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