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:

Interpersonal Relations

The connections and interactions between two or more people, which can influence various aspects of personal and professional life.

Unnecessary Guessing

Making assumptions or decisions without adequate information or basis, often leading to mistakes.

People Skills

The ability to communicate, interact, and work well with others effectively.

Internal Motivation

The drive to act or accomplish tasks based on internal rewards, values, or feelings, rather than external pressures or rewards.