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A company has equity capital of ₹50 lakh costing 18% and debt of ₹50 lakh with after-tax cost 8%. WACC is:

A10%
B13%
C12%
D15%
Answer & Solution
Correct answer: B. 13%
1. WACC = (We × Ke) + (Wd × Kd). 2. Weights: 50/100 = 0.5 each. 3. WACC = 0.5 × 18% + 0.5 × 8% = 9% + 4% = 13%. _Source: ICAI BoS CA Inter Paper 6A, Ch 4 "Cost of Capital", §10_
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A higher proportion of debt in the capital structure (other things equal) typically:A firm has Kd (after tax) 6%, Kp 10%, Ke 15%. Weights: 40% debt, 10% pref, 50% equity. WACMarginal Cost of Capital refers to:The weighted average cost of capital is computed using weights based on: