Technico Plans to Start a New Product Division That Will

question 52

Multiple Choice

Technico plans to start a new product division that will have a capital structure of 70 percent debt and 30 percent equity.The levered beta for this division has been estimated to be 2.02.What will be Technico's weighted cost of capital for this new division if the after-tax cost of debt is 7 percent, the risk-free rate is 8 percent, and the market risk premium is 5 percent?

• A)14.77%
• B)10.33%
• C)18.1%
• D)1.03%

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Definitions:

Founder Effects

A particular form of genetic drift deriving from a small founding population not possessing all the alleles present in the original population.

Genetic Drift

A mechanism of evolution involving random changes in the frequency of alleles within a population over time.

Testing for DNA

The process of examining a sample to identify the genetic material present, often used in forensic science, paternity testing, and genetics research.

Particulate

Relating to small distinct particles, often used in contexts like pollution (particulate matter) referring to tiny particles suspended in air.