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:

Separation Anxiety

The distress displayed by infants when a customary care provider departs.

Caregiver Decay

The physical and emotional deterioration often experienced by individuals who provide long-term care to someone with a chronic illness or disability.

Stranger Anxiety

The caution and wariness displayed by infants when encountering an unfamiliar person.

Activation Synthesis

A theory in neuroscience that proposes dreams result from the brain's effort to make sense of neural activity during sleep.