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Lannister Manufacturing has a target debt-equity ratio of 0.57. Its cost of equity is 21 percent, and its cost of debt is 10 percent. If the tax rate is 34 percent, what is the company's WACC?


Multiple Choice

16.56%


11.83%


14.98%


12.79%


15.77%

Respuesta :

abiolataiwo2015

The Weighted average cost of capital (WACC) is E. 15.77%.

How to find the weighted average cost of capital (WACC)?

Using this formula to find the WACC

WACC = Weighted of debt × cost of debt × (1- tax rate) + Weighted of equity × cost of equity

Let plug in the formula

WACC = (1/1.57)(.21) + (.57/1.57)(.10)(1 − .66)

WACC = 0.13375 + 0.02396

WACC = 0.1577 × 100

WACC = 15.77%

Therefore the correct option is E.

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

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