Corporate Finance

Taxes and WACC. Rainbow in the Dark Manufacturing has a target debt-equity ratio of .65. Its cost of equity is 13%, and its cost of debt is 8%. If the tax rate is 35%, what is the company's WACC?

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  1. (1/1.65) x .13 + (.65/1.65) x .08 x .65

    = .099273
    = 9.93%

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