Kokapeli,Inc

question 79

Multiple Choice

Kokapeli,Inc.has a target capital structure of 40% debt and 60% common equity,and has a 40% marginal tax rate.If the firm's yield to maturity on bonds is 7.5% and investors require a 15% return on the firm's common stock,what is the firm's weighted average cost of capital?

• A) 7.20%
• B) 10.80%
• C) 12.00%
• D) 12.25%

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Definitions:

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