PNB Industries Has 20 Million Shares of Common Stock Outstanding

question 46

Multiple Choice

PNB Industries has 20 million shares of common stock outstanding with a market price of $18.00 per share. The company also has outstanding preferred stock with a market value of $50 million, and 500,000 bonds outstanding, each with face value $1,000 and selling at 104 percent of par value. The cost of common stock is 15 percent, the cost of preferred stock is 12 percent, and the cost of debt is 8.50 percent. All costs are given at the before-tax level. If PNB's tax rate is 21 percent, what is the WACC?

• A) 7.05 percent
• B) 10.21 percent
• C) 8.85 percent
• D) 11.83 percent

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Definitions:

Financial Gain

The increase in monetary resources or wealth, often as a result of investments, business ventures, or other economic activities.

Retaining Mates

Strategies or behaviors employed to keep a romantic partner or ensure a long-term commitment.

Parenting Offspring

The act of raising and nurturing children, encompassing physical care, emotional support, and guidance for development.

Sexual Gratification

The pleasure and satisfaction derived from sexual activities or thoughts, which can contribute to an individual's overall sense of well-being.