Adjusted WACC. Lewis runs an outdoor adventure company and wants to know what effect a tax change will have on his company's WACC. Currently, Lewis has the following financing pattern Equity: 35% and cost of 14.00% Preferred stock: 15% and cost of 11.00% Debt: 50% and cost of 10.0% before taxes What is the adjusted WACC for Lewis if the tax rate is a. 40%? b. 30%? c. 20%? d. 10%? e. 0%?

Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
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Chapter7A: Using Wacc To Complete The Calibration Of Eva
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Adjusted WACC Lewis runs an outdoor adventure company and wants to know what effect a tax change will have
on his company's WACC. Currently, Lewis has the following financing pattern:
Equity: 35% and cost of 14.00%
Preferred stock: 15% and cost of 11.00%
Debt: 50% and cost of 10.0% before taxes
What is the adjusted WACC for Lewis if the tax rate is
a. 40%?
b. 30%?
c. 20%?
d. 10%?
e. 0%?
Transcribed Image Text:= Adjusted WACC Lewis runs an outdoor adventure company and wants to know what effect a tax change will have on his company's WACC. Currently, Lewis has the following financing pattern: Equity: 35% and cost of 14.00% Preferred stock: 15% and cost of 11.00% Debt: 50% and cost of 10.0% before taxes What is the adjusted WACC for Lewis if the tax rate is a. 40%? b. 30%? c. 20%? d. 10%? e. 0%?
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