Suppose That T-Shirts, Inc

question 45

Multiple Choice

Suppose that T-shirts, Inc.'s capital structure features 25 percent equity, 75 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 12 percent. If the appropriate weighted average tax rate is 21 percent, what will be T-shirts' WACC?

• A) 9.00 percent
• B) 7.74 percent
• C) 7.20 percent
• D) 4.75 percent

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Definitions:

Trainees

Individuals who are undergoing training to acquire new skills, knowledge, or qualifications.

Level of Skills

The degree of proficiency or competence that an individual has in performing specific tasks or activities.

Instructional Method

A strategy or approach used in teaching to facilitate learning and achieve educational goals.

Passive Learning

Learning through absorption without active participation or interaction, typically through lectures or reading.