单选题
On a market value basis, GFV Co is financed 70% by equity and 30% by debt. The company has an after-tax cost of debt of 6% and an equity beta of 1·2. The risk-free rate of return is 4% and the equity risk premium is 5%.
What is the after-tax weighted average cost of capital of GFV Co?
【正确答案】
D
【答案解析】Cost of equity = 4 + (1·2 x 5) = 4 + 6 = 10%
WACC = (10 x 0·7) + (6 x 0·3) = 7 + 1·8 = 8·8%