Gator Fabrics Inc

question 29

Multiple Choice

Gator Fabrics Inc. currently has zero debt . It is a zero growth company, and additional firm data are shown below. Now the company is considering using some debt, moving to the new capital structure indicated below. The money raised would be used to repurchase stock at the current price. It is estimated that the increase in risk resulting from the additional leverage would cause the required rate of return on equity to rise somewhat, as indicated below. If this plan were carried out, by how much would the WACC change, i.e., what is WACCOld - WACCNew?

• A) 2.74%
• B) 3.01%
• C) 3.32%
• D) 3.65%
• E) 4.01%

---

Definitions:

Transformational Coping

involves using stress and challenges as opportunities for growth, personal development, and transformation.

Hardy Personality

A set of characteristics that enable an individual to withstand stress and adversity more effectively than others.

Type A Personality

A personality type characterized by high levels of competitiveness, self-imposed stress, impatience, aggressiveness, and a constant sense of urgency.

Type C Personality

A personality style characterized by difficulty expressing emotions, a high level of detail orientation, and a tendency towards introversion.