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      Question

      A company has the following capital structure:

      • Equity: ₹60,00,000 (Cost of Equity = 15%) • Debt: ₹40,00,000 (Pre-tax cost = 10%) • Tax rate = 30% Calculate WACC.
      A 11.8% Correct Answer Incorrect Answer
      B 12% Correct Answer Incorrect Answer
      C 10.8% Correct Answer Incorrect Answer
      D 13.2% Correct Answer Incorrect Answer

      Solution

      WACC = (E/V × Ke) + (D/V × Kd × (1 – T)) = (60/100 × 15%) + (40/100 × 10% × 0.7) = 9% + 2.8% = 11.8%

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