Yven Has Capital of £2m, Three- Quarters from Shareholders Who

question 18

Multiple Choice

Yven has capital of £2m, three- quarters from shareholders who require a rate of return of 10 per cent and one- quarter from lenders, who require an 8 per cent return. If, as a result of considering tax, kDAT = 6%, what is the WACC?

• A) 8.5%
• B) 6.75%
• C) 4%
• D) 9%

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Definitions:

Error SSE

The sum of squared errors (SSE) is a measure used in statistics to quantify the discrepancy between the data and an estimation model.

Coefficient of Determination

A statistical measure that expresses the proportion of variance in the dependent variable that can be predicted from the independent variable(s).

Standard Error

A measure of the dispersion or variance of sample means around the population mean.

Regression Line

A regression line is a straight line that best fits the data points in a scatter plot, showing the relationship between an independent and a dependent variable.