Following is the balance sheet for Goldsmith Inc.
The company has pretax interest expense of $2,214 and a statutory tax rate of 37%. Your online investigation reveals that the company has a beta of 0.9. Assume that the risk free rate in 2017 is 3.5% and an appropriate "spread" of equities over the risk-free rate is 5%.
Calculate the company's weighted average cost of capital.

Question

Following is the balance sheet for Goldsmith Inc. 
  The company has pretax interest expense of $2,214 and a statutory tax rate of 37%. Your online investigation reveals that the company has a beta of 0.9. Assume that the risk free rate in 2017 is 3.5% and an appropriate "spread" of equities over the risk-free rate is 5%.
Calculate the company's weighted average cost of capital.

Quizplus · Accepted Answer

The Answer of Following is the balance sheet for Goldsmith Inc. 
  The company has pretax interest expense of $2,214 and a statutory tax rate of 37%. Your online investigation reveals that the company has a beta of 0.9. Assume that the risk free rate in 2017 is 3.5% and an appropriate "spread" of equities over the risk-free rate is 5%.
Calculate the company's weighted average cost of capital.

Following Is the Balance Sheet for Goldsmith Inc