Suppose That Topstone Industries Has a Cost of Equity of 14

question 6

Multiple Choice

Suppose that Topstone Industries has a cost of equity of 14% and a cost of debt of 9%. If the target debt/equity ratio is 75%, and the tax rate is 34%, what is Topstone's weighted average cost of capital (WACC) ?

• A) 6.6%
• B) 7.9%
• C) 8.4%
• D) 10.5%
• E) 10.9%

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