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the two dollar store has a cost of equity of 12.9 percent, the ytm on the company's bonds is 5.2 percent, and the tax rate is 25 percent. if the company's debt-equity ratio is .64, what is the weighted average cost of capital?

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abiolataiwo2015

If the tax rate is 25 percent. if the company's debt-equity ratio is .64, The weighted average cost of capital is 9.39%.

How to find the Weighted average cost of capital?

Using this formula to find the weighted average cost of capital

Weighted average cost of capital = (bonds × (1 - tax rate) ] × (debt -equity ratio / (1+ debt equity ratio) + Cos to equity × (1/ debt-equity ratio)

Let plug in the formula

Weighted average cost of capital =[0.052 × (1-0.25) ]× (.64/1.64) + 0.129 × (1/1.64)

Weighted average cost of capital =[0.052 × (.75) ]× (.64/1.64) + 0.129 × (1/1.64)

Weighted average cost of capital =[0.039 × 0.39024 ]+0.0787

Weighted average cost of capital =0.01522 + 0.0787

Weighted average cost of capital  =0.0939× 100

Weighted average cost of capital =9.39%

Therefore the Weighted average cost of capital is 9.39%.

Learn more about Weighted average cost of capital here:https://brainly.com/question/8287701

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