# Solution Library

# Calculation Of Weighted Average Cost Of Capital With No Debt

**Question**

Omega Corporation has 10 million shares outstanding, now trading at $55 per share. The firm has determined that its current cost of equity equals 12%. Omega also has $200 million in bonds outstanding with a corresponding bond yield of 7%. Assuming that the firm’s marginal tax rate equals 35%, please answer the following two questions:

*(i) *What is Omega Corporation’s current cost of capital (or WACC)?

(*ii*) What would the cost of capital of Omega Corporation be if the firm used no debt at all? How do you explain the difference with your answer in part (*i*)?

**Summary**

The question belongs to Finance and it discusses about calculation of current cost of capital and calculation of cost of capital with no debt at all.

**Total Word Count 167**

## Comments

Rashathis is a very good website

maaniI have 50 questions for the same test your page is showing only 28

joeannehi can you please help or guide me to answer my assignments. thanks

joeannehi can anyone help or guide me to my assignments. thanks

MonikCristinaThis solution is perfect ...thanks

JaneteHello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

SandeepPerfect bank of solution.

Oxanagreat !

Paul Brandon-Fritziusthanks for the quick response. the solution looks good. :)

tina Johnsonthnx for the answer. it was perfect. just the way i wanted it.

Giuseppeworks fine.