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The wacc for a firm is 13.00 percent. you know that the firm's cost of debt capital is 10 percent and the cost of equity capital is 20%. what proportion of the firm is financed with debt? assume there are no taxes.

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RedTomato
Answer: 70%

x Debt = Y, x Equity = (1 – Y) k Firm = x Debt k Debt + x Equity k Equity ==> 0.13= (Y x 0.1) + ((1 – Y) x 0.20) ==> Y = 0.7

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