A firm is planning a $25 million expansion

问题单项选择题

A firm is planning a $25 million expansion project. The project will be financed with $10 million in debt and $15 million in equity stock (equal to the company’s current capital structure). The before-tax required return on debt is 10 percent and 15 percent for equity. If the company is in the 35 percent tax bracket, what cost of capital should the firm use to determine the project’s net present value (NPV)（）

A. 11.6%.

B. 9.6%.

C. 10.5%.

答案

参考答案：A

解析：

WACC=(E/V)(RE)+(D/V)(RD)(1-T_C)

WACC=(15/25)(0.15)+(10/25)(0.10)(1-0.35)=0.09+0.026=0.116 or 11.6%