geduiwelh
2021-08-21
Liyana Mansell
Skilled2021-08-22Added 97 answers
a) Calculation:
Write the equation to calculate the cost of the capital (COC).
Here, the amount that the partner has invested is Equity, the amount that firm has borrowed is Debt, the return on equity is ROE, return on debt is ROD, and tax rate is t.
Substitute $75000 for Equity, $125000 for Debt,
Conclusion:
Therefore, the firms cost of capital before tax is
b) Calculation:
Substitute $75000 for Equity, $125000 for Debt,
Conclusion:
Therefore, the firms cost of capital after tax is,
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