Technico Plans to Start a New Product Division That Will

question 24

Multiple Choice

Technico plans to start a new product division that will have a capital structure of 70 percent debt and 30 percent equity. The leveraged beta for this division has been estimated to be 2.02. What will be Technico's weighted cost of capital for this new division if the after-tax cost of debt is 7 percent, the risk-free rate is 8 percent, and the market risk premium is 5 percent?

• A) 14.77%
• B) 10.33%
• C) 18.1%
• D) 1.03%

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Definitions:

Gradual Vision Loss

A progressive deterioration of sight over time that can occur due to factors such as age, diseases, or injuries.

Flashes of Light

Brief bursts of light perceived by the eyes, often due to vitreous detachment or retinal issues, which can appear without an external light source.

Retinal Detachment

A significant medical situation in which the retina detaches from its usual location at the back of the eye.

Fluids

Substances that have no fixed shape and yield easily to external pressure; gas or liquid.