n NISM Certifications
XV NISM Series XV
Medium

A company has a cost of equity of 13% and a cost of debt of 10%. The company’s capital structure consists of 60% debt. Using this data, calculate the Weighted Average Cost of Capital (WACC) for the firm.

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    12.30%

  2. 11.20%

    Correct answer

  3. C

    10.90%

  4. D

    9.70%

Why this is the answer

WACC = (0.13 × 0.40) + (0.10 × 0.60) = 11.20%.

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