Floyd, a Minor, Misrepresents His Age When Entering into a Contract

question 20

Multiple Choice

Floyd, a minor, misrepresents his age when entering into a contract to buy a car from Gas Hogs Inc. Floyd takes possession of the car, but makes no payments on the contract and attempts to disaffirm it. In a growing number of states, Gas Hogs can recover

• A) an amount equal to the wholesale value of the car.
• B) the car, but not any of the balance due on the contract.
• C) the balance due on the contract.
• D) nothing.

---

Definitions:

Weighted Average Cost of Capital (WACC)

A computation of an enterprise's cost of capital, with each capital category assigned a proportional weight.

Weighted Average Cost of Capital (WACC)

A measure of a firm's cost of capital in which each category of capital is proportionately weighted.

Corporate Tax Rate

The tax that corporations are required to pay on their income, which varies by country and sometimes by the level of income or industry.

Embedded Debt Cost

The total expenses, both direct and indirect, associated with issuing and carrying debt over its entire life, including interest payments and fees.