How Much Is Added to a Firm's Weighted-Average Cost of Capital

question 2

Multiple Choice

How much is added to a firm's weighted-average cost of capital for 45% debt financing with a required rate of return of 10% and a tax rate of 35%?

• A) 1.29%
• B) 2.93%
• C) 3.50%
• D)4.50%

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Definitions:

Machiavellian Behaviour

Refers to a person's tendency to deceive and manipulate others for personal gain, based on the philosophies of Niccolò Machiavelli.

Organizational Politics

The activities and behaviors individuals engage in within a workplace to gain power, influence decisions, and achieve personal or organizational objectives.

Beneficial

Refers to something that provides an advantage or contributes to well-being.

Strategic Contingencies

Critical events or factors that significantly influence the success of strategies or decision-making processes within organizations.