The wacc for a firm is 19.75 percent. you know that the firm is financed with $75 million of equity and $25 million of debt. the cost of debt capital is 7 percent. what is the cost of equity for the firm?

a. 19.75%
b. 24.00%
c. 32.50%
d. 58.00%

b. 24.00%

Explanation:

The formula to compute WACC is shown below:

WACC = Weightage of debt × cost of debt + (Weightage of  common stock) × (cost of common stock)

19.75% = (0.25 × 7%)  +  (0.75 × cost of equity)

19.75% = 1.75% +  (0.75 × cost of equity)

18% =   (0.75 × cost of equity)

So, the cost of equity would be = 24%

Weighted of debt = ($25 million ÷ $100 million) = 0.25

And, the weighted of common stock = (Common stock ÷ total firm)

                                                              = $75 million ÷ $100 million

                                                              = 0.75            

i think the answer to your question is b. directive

it's actually a very difficult task, due to not many people can make 2 million dollars in 2 years. besides that, to the not-so-realistic ideas, you can create a business. it could be practically anything, but make it into a business that isn't that known yet, you get me? also, lets not forget about stock market. that's where all the good stuff happens. use investments at the beginning and begin to raise up your business or whatever you're going to do. as this is a very non-realistic idea, it's still worth the shot!