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            | Topic: | Business | 
        
            | Number of pages / Number of words: | 3 / 572 | 
                
    
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The
formula for this is: WACC=WdKd(1-tax rate) + WpKpf + WsKs. I found the weights
of debt and equity on Value Line, and they were: Wd=55%, and Ws=45%. The cost
of debt and equity were already calculated, and the tax rate of 40% was given to
us. There was no preferred stock, so I did not use those numbers in my
calculation...
        
        
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There was no preferred stock, so I did not use those numbers in my
calculation. After plugging in the values, my WACC came out to be 7.71%.
This number can be interpreted as the weighted average cost of each new dollar
of capital raised at the margin. The capital is basically the entire right hand
side of the balance sheet, and the cost of capital must be minimized in order to
maximize the value of the firm...
        
        
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