XYZ Industries Has 10 Million Shares of Stock Outstanding Selling

question 38

Multiple Choice

XYZ Industries has 10 million shares of stock outstanding selling at $10 per share with par of $1 per share. The company also has an issue of $30 million in 8.5 percent, annual coupon bonds with a maturity of 25 years, selling at 102 percent of par ($1,000) . If XYZ's weighted average tax rate is 21 percent and its cost of equity is 15 percent, what is XYZ's WACC?

• A) 8.06 percent
• B) 11.75 percent
• C) 13.02 percent
• D) 13.43 percent

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Definitions:

Neuropsychology

Area of psychology in which psychologists specialize in the research or clinical implications of brain–behavior relationships.

Self-Actualization

A concept in psychology referring to the realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.

Free Will

The concept that human beings have the ability to make choices that are not predetermined by external circumstances or internal conditions.

Involuntary Reaction

A response to a stimulus that occurs automatically without conscious intent or control.