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Chrome File Edit View History Bookmarks People Window Help 69%E, "I QE , Sun 7:41 PM Hassan Alsaihati D Assignment Results Tulloch Manufacturing Has A Hassan × × c o D ezto.mheducation.com/hm.tpx?todo-postSubmissionview :: Apps UWM-, hotmail A ALEKS MathwayPEX Expedia-CR EagleRider Rentals AT&T; > Pay Onlir at VIP ( DWileyPLUS O su O+ui Principles of Finance 350: Fall 2017-001 HASSAN ALSAIHATI FINANCE Assignment 13 - GRADED instructions I help Score: 4/6 Points 66.67% Question 9 (of 9) Return To Assignment List Award: 0 out of 0.50 points Tulloch Manufacturing has a target debt-equity ratio of.63. Its cost of equity is 14.7 percent, and its pretax cost of debt is 9.7 percent. If the tax rate is 30 percent, what is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC 9.31 0 % Hints eBook & Resources Hint#1 26

Explanation / Answer

Debt-equity ratio=Debt/Equity

Let equity be x

hence debt=0.63x

Total=1.63x

Cost of debt after tax=9.7(1-0.3)=6.79%

WACC=Respective costs*Respective weights

=(6.79*0.63x/1.63x)+(14.7*x/1.63x)

=11.64%(Approx)

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