Total debt = 90,000,000

Total capital = 240,000,000+ 90,000,000

Total Capital= 330,000,000
Weight of debt= 90,000,000/330,000,000= 0.2727= 27.27%
Wight of equity = 20,000,000/330,000,000= 0.7273= 72.7
11.
A company has 30 million shares outstanding trading for $8 per
share. It also has $90 million in outstanding debt. If its equity cost of
capital is 15%, and its debt cost of capital is 9%, and its effective
corporate tax rate is 40%, what is its weighted average cost of
capital?
Total debt = 90,000,000
Total capital = 240,000,000+ 90,000,000
Total Capital= 330,000,000
Weight of debt= 90,000,000/330,000,000= 0.2727= 27.27%
Weight of equity = 20,000,000/330,000,000= 0.7273= 72.73%
WACC
= 0.15x 0.7272+0.09x(1-0.40)x 0.2727
= 0.1090 + 0.054x 0.2727
= 0.1090 + 0.0147
= 0.1238
Weighted average cost of capital =12.38%