A Firm Has 5,000,000 Shares of Common Stock Outstanding, Each

question 77

Multiple Choice

A firm has 5,000,000 shares of common stock outstanding, each with a market price of $8.00 per share. It has 25,000 bonds outstanding, each selling for $1,100 with a $1,000 face value. The bonds mature in 12 years, have a coupon rate of 9 percent, and pay coupons semiannually. The firm's equity has a beta of 1.4, and the expected market return is 15 percent. The tax rate is 21 percent and the WACC is 14 percent. Calculate the risk-free rate.

• A) 3.90 percent
• B) 15.27 percent
• C) 20.18 percent
• D) 1.19 percent

---

Definitions:

Text Box

A GUI element that enables users to input text into a document or a form within software applications.

Closest Text Box

A term that might refer to the process of identifying or selecting the text box nearest to a certain point or object within a graphical user interface or design layout.

Calculated Field

A field in databases or spreadsheet applications that generates values based on other data fields through a specified formula or function.

Report Property

A characteristic or parameter of a report in database or software applications that can be set or adjusted to control the report's appearance or functionality.