Gator Fabrics Inc A) 274%
B) 3

question 36

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? $$\begin{array} { l c l r } \mathrm { w} _ { \mathrm { d } } & 55 \% & \text { Orig. cost of equity, } \mathrm { r } _ { \mathrm { S } } & 10.0 \% \\\mathrm { w } _ { \mathrm { C } } & 45 \% & \text { New cost of equity } = \mathrm { r } _ { \mathrm { S } } & 11.0 \% \\\text { Interest rate new } = \mathrm { r } _ { \mathrm { d } } & 7.0 \% & \text { Tax rate } & 40 \%\end{array}$$

Appreciate the impact of governmental policies such as price floors, ceilings, and rent controls on market equilibrium.

Grasp the concepts of usury and laws regulating interest rates and their implications for consumers and the market.

Interpret the basic principles of the price system and signal mechanisms in a market economy.

Demonstrate the ability to analyze market conditions and predict changes in equilibrium price and quantity.

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Definitions:

Dorsal Stream

A pathway in the brain that processes visual information related to motion and spatial awareness, connecting the occipital and parietal lobes.

Object Identification

Object identification is a process in human and machine perception that involves recognizing and naming specific objects within the visual field based on shapes, patterns, and colors.

Control Of Movement

The regulation and coordination of muscle activities to achieve voluntary and involuntary motions.

Primary Colors

Primary colors are fundamental colors (red, blue, and yellow) that cannot be created through the combination of other colors and are used as the basis to create a wide spectrum of other colors.