Assume the following data for U&P Company: Debt (D)= $100 million; Equity (E)= $300 million; r_D = 6%; r_E = 12%; and T_C = 30%.Calculate the after-tax weighted average cost of capital (WACC): A)10.50% B)15.00% C)10.05% D)9.45%

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Quizplus · Accepted Answer

The WACC is calculated as: WACC = (E/V) * rE + (D/V) * rD * (1-TC), where V = D + E. Here, V = $100m + $300m = $400m. Thus, WACC = ($300m/$400m) * 12% + ($100m/$400m) * 6% * (1-0.30) = 9% + 1.05% = 10.05%.

Assume the Following Data for U&P Company: Debt (D)= $100