A fiRm fiNances Its Projects with 45% Common Stock, 15

question 129

Multiple Choice

A firm finances its projects with 45% common stock, 15% preferred stock, and 40% debt. The firm has a 34% marginal tax rate. The cost of equity is 9%, the cost of preferred is 8%, and the cost of
Debt is 7%. What is the WACC?

• A) 6.98%
• B) 7.10%
• C) 7.24%
• D) 7.80%
• E) 8.05%

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Definitions:

Organization Change

Refers to the process through which organizations transform their structure, strategies, operational methods, or culture to adapt to changes in the external environment or to improve internal efficiency.

Executive Edit

The process of making revisions or decisions by a senior editor or executive, particularly in publishing or content creation.

Role Model

A person whose behavior, example, or success is or can be emulated by others, especially by younger people.

Inspirational Appeal

The ability to inspire and motivate others through emotional or value-driven arguments.