Plasti-Tech Inc

question 62

Multiple Choice

Plasti-tech Inc.is financed 60% with equity and 40% with debt.Currently, its debt has a before-tax interest rate of 12%.Plasti-tech's common stock trades at $15 per share and its most recent dividend was $1.00.Future dividends are expected grow by 4%.If the tax rate is 34%, what is Plasti-tech's WACC?

• A)7.39%
• B)9.57%
• C)9.73%
• D)11.20%

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Definitions:

Debts

Money owed by one party to another under an agreement to repay borrowed funds or services.

Stocks

Financial instruments representing ownership in a company or corporation, offering a claim to part of the corporation's assets and profits.

Equity Securities

Financial instruments representing ownership in a company, such as stocks, which give shareholders voting rights and potential dividends.

Ownership

The state or fact of legal possession and control over property, which can include goods, land, or intellectual property.