Calculate the WACC for a Firm with a Debt-Equity Ratio

question 20

Multiple Choice

Calculate the WACC for a firm with a debt-equity ratio of .6.The debt pays 12% interest and the equity is expected to return 14%.Assume a 40% tax rate and risk-free debt.

• A)11.45%
• B)12.50%
• C)13.55%
• D)14.60%

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Definitions:

State of Crisis

A situation or period in which an organization or community faces significant challenges or threats that require immediate and effective response.

Strategic Planning

The process of defining an organization's strategy or direction and making decisions on allocating resources to pursue this strategy.

Fewer Employees

A situation or strategy where an organization operates with a reduced number of staff members to cut costs or improve efficiency.

Performing Well

Refers to achieving or exceeding set objectives, goals, or benchmarks in a specific context, such as business operations, academic achievements, or personal development.