Delta Mills and Franklin Mill Are Identical Firms Except for Their

question 70

Multiple Choice

Delta Mills and Franklin Mill are identical firms except for their capital structures.Delta is an unlevered firm with $680,000 of equity.Franklin is a levered firm with $425,000 of equity and $255,000 of debt at an interest rate of 6.2 percent.Both Delta and Franklin have an expected EBIT of $84,000.Ignore taxes.Delta has a WACC of ________ percent and Franklin's WACC is ________ percent.

• A)12.35;11.05
• B)12.35;14.10
• C)12.35;12.35
• D)14.10;14.10
• E)16.10;14.10

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Definitions:

Interpersonal System

A concept in nursing and psychology referring to the structured and dynamic relationships between individuals, emphasizing communication and interaction patterns.

Special Form

A unique or distinct arrangement, shape, or structure that sets something apart from others.

Organic Product

A compound or material derived from living organisms or produced by chemical reactions involving organic compounds.

Reaction

A procedure whereby reactants are changed into different entities, the outcomes of which are called products.