WEIGHTED AVERAGE COST OF CAPITAL

A company has the following capital structure: $456 in debt at 12% and $350 in equity at 20%. If the tax rate is 30%,
the weighted average cost of capital

Tax rate = 30%

AMOUNT TYPE COST AFTER TAXES WEIGHT

456.00 debt 12.00% 8.40% 56.58%

350.00 equity 20.00% 20.00% 43.42%
806.00

A company has the following financing structure. If the tax rate is 32%, determine the Weighted Average Cost of Cap

Tax rate = 32%

AMOUNT TYPE COST AFTER TAXES WEIGHT

1,500.00 Suppliers 0.00%

2,400.00 Short-term loan 15.00% 10.20% 15.19%
5,200.00 Long-term loan 13.00% 8.84% 32.91%
3,200.00 Mortage 9.00% 6.12% 20.25%
5,000.00 Equity 20.00% 20.00% 31.65%
15,800.00 <-- Capital structure 100.00%

MININUM REQUIRED RATE OF RETURN MRRR

A company has a WACC of 14% and has placed future investment projects into different categories. Determine the M
each one.

WACC 14%
High risk Moderate risk Low risk Mandatory
Cost savings; Pollution-
Expansion of existing Replacement of control
New products lines existing equipment equpment
6% 0% -4% NA Adjustment factor
20% 14% 10% NA MRRR

A company has $500 in long-term debt and $500 in Equity. If the cost of debt is 7%, the cost of capital is 13% and t
30%, determine: the company´s WACC and the MRRR for a project with medium risk that has an adjustment factor o
Tax rate = 30% Adj. Factor = 5%
AMOUNT TYPE COST AFTER TAXES WEIGHT

500.00 Long-term debt 7% 5% 50%

500.00 Equity 13% 13% 50%
1,000.00

A company is evaluating opening a new store. Its capital structure is made up of $500 in long-term debt and $1,000
equity. If the cost of debt is 6%, the cost of capital is 18% and the tax rate is 35%. The company considers and
adjustment factor of 5% for new projects that are not related to the company´s core business. Determine: the
company´s WACC and MRRR. If the IRR of the project is 15%, should it be undertaken?

Tax rate = 35% Adj. Factor = 0%

AMOUNT TYPE COST AFTER TAXES WEIGHT

500.00 Debt 6% 4% 33%

1,000.00 Equity 18% 18% 67%
1,500.00
 0 in equity at 20%. If the tax rate is 30%, determine

WEIGHTED AVERAGE
COST
4.75%
8.68%
13.44% WACC Peso promedio del costo de capital. Porcentaje de cuánto cuesta el capital.

rmine the Weighted Average Cost of Capital

WEIGHTED AVERAGE
COST

1.55%
2.91%
1.24%
6.33%
12.03% WACC

nto different categories. Determine the MRRR for

Adjustment factor

ebt is 7%, the cost of capital is 13% and the tax rate is
dium risk that has an adjustment factor of 5%
 WEIGHTED AVERAGE
COST
2.45%
6.50%
8.95% WACC
13.95% MRRR

p of $500 in long-term debt and $1,000 in

35%. The company considers and
ny´s core business. Determine: the
ndertaken?

WEIGHTED AVERAGE
COST
1.30%
12.00%
13.30% WACC
13.30% MRRR
uesta el capital.