Werner Corporation Has a Target Capital Structure That Consists of 40

question 10

Multiple Choice

Werner Corporation has a target capital structure that consists of 40 percent debt and 60 percent equity. Werner can borrow at an interest rate of 10 percent. Also, Werner has determined its cost of equity to be 14 percent. Werner's tax rate is 40 percent. What is Werner's weighted average cost of capital?​

• A)10.8 percent
• B)12.4 percent
• C)9.2 percent
• D)none of the above

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Definitions:

Economically

Pertaining to the management, production, and distribution of goods and services in a financial context.

Doubling Time

The period it takes for a quantity to double in size or value, often used in demography to describe the rate of population growth.

Population Growth

The increase in the number of individuals in a population, often measured by the rate at which the population is increasing.

Birth Rates

The number of live births per thousand of the population per year.