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EpiscoWhat EpiscoWhat
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7 years ago
The WACC for this project is closest to:
A) 3.0%
B) 5.0%
C) 7.0%
D) 8.2%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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#1
7 years ago
A
Explanation:  A) Since this project is totally debt financed at the risk free rate, the risk free rate of 5% is the before tax WACC. The after tax wacc is the simply rf(1 - Tc) = 5%(1 - 40%) = 3%.
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