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Daves IncRecently Hired You as a Consultant to Estimate the Company's

question 27

Multiple Choice

Daves Inc.recently hired you as a consultant to estimate the company's WACC.You have obtained the following information.(1) The firm's noncallable bonds mature in 20 years,have an 8.00% annual coupon,a par value of $1,000,and a market price of $1,050.00.(2) The company's tax rate is 40%.(3) The risk-free rate is 4.50%,the market risk premium is 5.50%,and the stock's beta is 1.20.(4) The target capital structure consists of 35% debt and the balance is common equity.The firm uses the CAPM to estimate the cost of equity,and it does not expect to issue any new common stock.What is its WACC?

Analyze the role of education in the development process.

Understand the vicious-circle-of-poverty hypothesis and its implications for economic growth.

Recognize the importance of entrepreneurship in economic development.

Explain the role of international and financial institutions in promoting economic development.

Definitions:

Anal Stage

The second stage in Freud's psychosexual development theory, occurring from about 18 months to three years of age, where the focus of pleasure is on controlling bladder and bowel movements.

Reciprocal Determinism

In social-cognitive learning theories, the two-way interaction between aspects of the environment and aspects of the individual in the shaping of personality traits.

Heritability

A statistical estimate of the proportion of the total variance in some trait that is attributable to genetic differences among individuals within a group.

Factor Analysis

A statistical method for analyzing the intercorrelations among various measures or test scores; clusters of measures or scores that are highly correlated are assumed to measure the same underlying trait or ability (factor).