The Abco Co

question 215

Multiple Choice

The Abco Co. maintains a debt-equity ratio of .70 and has a tax rate of 39 percent. The firm does not issue preferred stock. The cost of equity is 12 percent and the after-tax cost of debt is 5 percent.
What is Abco's weighted average cost of capital?

• A) 8.8 percent
• B) 8.9 percent
• C) 9.1 percent
• D) 9.3 percent
• E) 9.5 percent

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Definitions:

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A sexual orientation describing individuals attracted to both men and women.

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