Given the Following Information for Groto Corp

question 14

Multiple Choice

Given the following information for Groto Corp. find the WACC. Assume the company's tax rate is 30%. Bonds: 10,000 9% coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling
For 98% of par; the bonds make semi-annual payments. Common shares: 300,000 shares
Outstanding, selling for $40 per share; the beta is 0.95. Preferred shares: 55,000 shares of 6%
Preferred stock outstanding, currently selling for $100 per share. 10% market risk premium and 3%
Risk-free rate.

• A) 13.32%
• B) 12.32%
• C) 11.22%
• D) 10.12%
• E) 9.02%

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Definitions:

Res Ipsa Loquitur

A legal doctrine that suggests negligence is inferred from the very nature of an accident or injury, in the absence of direct evidence.

Burden Of Proof

The duty of the plaintiff or prosecution to establish a claim or allegation by admissible evidence and to prove that the defendant committed all the essential elements of the crime to the jury’s or court’s satisfaction beyond any reasonable doubt, in order to convict the defendant.

Punitive Damages

Financial compensation awarded to a plaintiff that goes beyond what is necessary to compensate for losses and is intended to punish the defendant for egregious wrongdoing.

Outrageous

Behavior or actions that are shocking because they are so wrong, unusual, or out of the ordinary.