What Is the WACC for a Firm with 40% Debt

question 47

Multiple Choice

What is the WACC for a firm with 40% debt, 20% preferred stock, and 40% equity if the respective costs for these components are 6% after tax, 12% after tax, and 18% before tax? The firm's tax rate is 35%.

• A) 9.48%
• B) 11.16%
• C) 12.00%
• D)15.60%

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Definitions:

Customer Objections

Concerns or reasons potential buyers offer to avoid making a purchase decision, which need to be understood and addressed by sales personnel.

Personal-Selling Process

A series of stages a salesperson goes through to persuade a customer to make a purchase, including prospecting and follow-up.

Benefits

In the FAB sales approach, individual values attached to the advantages offered by various product features.

Delivery Salespeople

Sales representatives whose chief role is product delivery; sometimes called route salespeople.