Allen Corporation Has the Following Equity Structure The Weighted Average Cost of Capital Is
A) 14

question 26

Multiple Choice

Allen Corporation has the following equity structure: $$\begin{array} { l c l } & \text { Market Value } & \text { After Tax Cost } \\\text { Long-term debt } & \$ 700,000 & 15 \% \\\text { Preferred stock } & 50,000 & 5 \\\text { Common stock } & 250,000 & 15\end{array}$$ The weighted average cost of capital is

• A) 14.5%
• B) 8.2%
• C) 8.7%
• D) 10.3%

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Definitions:

Utility Function

A mathematical representation of how consumer preferences are related to the consumption of goods and services.

Competitive Market

A market structure characterized by a large number of buyers and sellers, all of whom have minimal impact on the market price.

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The large, round, tropical fruit with a hard shell, white flesh, and clear liquid inside, produced by the coconut palm.

Fish

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