Gnomes r us is considering a new project. the company has a debt-equity ratio of .84. the company's cost of equity is 14.9 percent, and the aftertax cost of debt is 8.2 percent. the firm feels that the project is riskier than the company as a whole and that it should use an adjustment factor of +4 percent. requirement 1: what is the company's wacc?
Gnomes R us WACC would be .84*.082+.149*.16=.09272. Wacc is calculated by the cost of equity times the equity ratio, and the after tax cost of debt times the debt ratio.
