Get premium membership and access questions with answers, video lessons as well as revision papers.
Solution
Keg=15%+(15%-5%)x1/4=17.5%
WACC=(0.2x0.05)+(0.8x0.175)=15%
The WACC in the geared firm is the same as the WACC in the ungeared firm.
NatalieR answered the question on June 17, 2022 at 06:55
- Explain the measurements of cost of capital(Solved)
Explain the measurements of cost of capital
Date posted: June 16, 2022. Answers (1)
- What are three basic concept of cost of capital?(Solved)
What are three basic concept of cost of capital?
Date posted: June 16, 2022. Answers (1)
- Briefly outline the roles of participants in Capital Markets in Kenya(Solved)
Briefly outline the roles of participants in Capital Markets in Kenya
Date posted: June 16, 2022. Answers (1)
- Define mortgage(Solved)
Define mortgage
Date posted: June 16, 2022. Answers (1)
- Discuss both internal and external sources of finance(Solved)
Discuss both internal and external sources of finance
Date posted: June 16, 2022. Answers (1)
- What are some of important routine financial functions?(Solved)
What are some of important routine financial functions?
Date posted: June 16, 2022. Answers (1)
- List elements of dividend decision(Solved)
List elements of dividend decision
Date posted: June 16, 2022. Answers (1)
- Give two aspects of financial management(Solved)
Give two aspects of financial management
Date posted: June 16, 2022. Answers (1)
- Why is studying finance important?(Solved)
Why is studying finance important?
Date posted: June 16, 2022. Answers (1)
- List and explain 4 forms of Debt Finance(Solved)
List and explain 4 forms of Debt Finance
Date posted: February 9, 2022. Answers (1)
- Explain features of ordinary shares.(Solved)
Explain features of ordinary shares.
Date posted: September 26, 2019. Answers (1)
- Evaluate any three factors that may be responsible for the slow growth in the number of companies seeking listing at the Nairobi stock exchange or...(Solved)
Evaluate any three factors that may be responsible for the slow growth in the number of companies seeking listing at the Nairobi stock exchange or stock exchange in your country
Date posted: July 30, 2019. Answers (1)
- Outline major reasons why there is slow growth of credit card business in Kenya(Solved)
Outline major reasons why there is slow growth of credit card business in Kenya.
Date posted: March 17, 2019. Answers (1)
- Differentiate between conflicts of Profit Verses Wealth Maximization Principal.(Solved)
Differentiate between conflicts of Profit Verses Wealth Maximization Principal.
Date posted: March 4, 2019. Answers (1)
- What does the Investment decision entail.(Solved)
What does the Investment decision entail.
Date posted: March 4, 2019. Answers (1)
- Differentiate between accounting and economics.(Solved)
Differentiate between accounting and economics.
Date posted: March 4, 2019. Answers (1)
- Who are the users of financial information?(Solved)
Who are the users of financial information?
Date posted: May 22, 2018. Answers (1)