Calculate a Firm's WACC Given That the Total Value of the Firm

question 31

Multiple Choice

Calculate a firm's WACC given that the total value of the firm is $2,000,000, $600,000 of which is debt, the cost of debt and equity is 10% and 15% respectively, and the firm pays no taxes:

• A)9.0%
• B)11.5%
• C)13.5%
• D)14.4% WACC = .10(600,000/2,000,0000) + .15(1,400,000/2,000,000)
• = )10(.3) + .15(.7)

---

Definitions:

Basic Needs

Fundamental requirements necessary for individuals to live a healthy and satisfactory life, such as food, water, shelter, education, and healthcare.

Investment Climate

The economic, financial, and socio-political environment influencing the willingness and ability of individuals and firms to invest in a particular country or region.

Semiperipheral Countries

Nations that are midway between the core and periphery in the world economic system, showing characteristics of both developed and developing countries.

Peripheral Countries

Nations that are less developed economically and politically, often exploited by more developed countries.