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Adjusted WACC. Lewis runs an outdoor adventure company and wants to know what effect a tax...

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Finance

Adjusted WACC. Lewis runs an outdoor adventure company and wantsto know what effect a tax change will have on his? company's WACC.Currently, Lewis has the following financing? pattern:

?Equity: 41?% and cost of 15.66?%

Preferred? stock: 13?% and cost of 12.93?%

?Debt: 46?% and cost of 9.5?% before taxes

What is the adjusted WACC for Lewis if the tax rate is

a.??40?%?

b.??30?%?

c.??15?%?

d.??5?%?

e.??0?%?

Answer & Explanation Solved by verified expert
3.9 Ratings (758 Votes)
a WACC Weight of equitycost of equity weight of debtcost of preferred stock weight of debtafter tax cost of debt WACC 04101566 01301293 04600951 04 WACC 006421 001681 002622 WACC 01072 or 1072    See Answer
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Transcribed Image Text

Adjusted WACC. Lewis runs an outdoor adventure company and wantsto know what effect a tax change will have on his? company's WACC.Currently, Lewis has the following financing? pattern:?Equity: 41?% and cost of 15.66?%Preferred? stock: 13?% and cost of 12.93?%?Debt: 46?% and cost of 9.5?% before taxesWhat is the adjusted WACC for Lewis if the tax rate isa.??40?%?b.??30?%?c.??15?%?d.??5?%?e.??0?%?

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