PPT Slide
4. Find Firm L’s WACC.
WACCL = (D/V)kd(1 - T) + (S/V)ks
= ( )(8.0%)(0.6)
+( )(16.33%)
WACCL = 1.89% + 9.91% = 11.80%.
Note: When corporate taxes are considered, the WACC is lower for the leveraged firm than for the unleveraged firm.
$1,000,000
$2,542,857
$1,542,857
$2,542,857
Previous slide
Next slide
Back to first slide
View graphic version