Whatís WACC using only retained earnings for equity component of WACC1?

© 1998 The Dryden Press

WACC1 = wdkd(1 - T) + wpskps + wceks

= 0.3(10%)(0.6) + 0.1(9%) + 0.6(14%)

= 1.8% + 0.9% + 8.4% = 11.1%.

= Cost per $1 until retained earnings used up.

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