The calculation of Mullineaux's WACC is 0.47425.
What is WACC?
The return that lenders and shareholders anticipate receiving in exchange for contributing capital to a company is represented by the weighted average cost of capital, which is the average cost to attract investors.
The given is Mullineaux Corporation WACC are:
cost of equity is 12.5 percent
7 percent debt.
If the tax rate is 35 percent
equity ratio of .55
0.35(12.5) + 0.35(0.7)(1- .35)
0.4375 + 0.35(0.7)(1- .35)
0.4375 + (0.245) (1- .35)
0.4375 + (0.245) (0.15)
0.4375 + 0.03675
0.47425 is Mullineaux's WACC.
As a result, the answer is 0.47425 Mullineaux's WACC.
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