MinMax Corp Has the Following Capital Structure: 55% Common Equity

question 41

Multiple Choice

MinMax Corp has the following capital structure: 55% common equity (giving a return of 9%) , 10% preferred shares (with a yield of 6%) , and 35% debt (with a coupon rate of 10% and yield to maturity of 6.5%) .If MinMax Corp.has an income tax rate of 40%, what is the firm's WACC?

• A)10.333%
• B)9.050%
• C)7.825%
• D)6.915%

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Definitions:

Distribution Policies

The strategies and rules set by a company to control the distribution and sale of its products through various channels.

Selling Agents

Individuals or companies that act on behalf of sellers to market and sell their products or services.

Intermediaries

Agents or businesses that act as a middleman in the distribution chain, moving products from producers to consumers.

Manufacturers' Agents

Independent sales agents who represent multiple manufacturers and their products without taking ownership of the goods.