Your fiRm Has Expected Earnings Before Interest and Taxes of $2,400

question 29

Multiple Choice

Your firm has expected earnings before interest and taxes of $2,400. Your unlevered cost of capital is 12% and your tax rate is 35%. You have debt with both a book and a market value of $5,000. This
Debt has a 7% coupon and pays interest annually. What is your weighted average cost of capital?

• A) 10.02%
• B) 10.21%
• C) 10.32%
• D) 10.58%
• E) 11.23%

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Definitions:

Sexual Orientation

An inherent or immutable enduring emotional, romantic, or sexual attraction to other people.

Job Migration

The movement of workers from one sector, region, or country to another, often in pursuit of better employment opportunities and working conditions.

Ecological Fallacy

The error that arises when conclusions about individual-level behavior are drawn from aggregate-level data, assuming that group data reflect the individual behaviors within the group.

Workforce Diversity

The inclusion of individuals of different races, ethnicities, genders, ages, religions, disabilities, and sexual orientations in the workplace.