The Felix Filter Corp

question 39

Multiple Choice

The Felix Filter Corp. maintains a debt-equity ratio of .6. The cost of equity for Richardson Corp. is 16%,the cost of debt is 11% and the marginal tax rate is 30%. What is the weighted average cost of capital?

• A) 8.38%
• B) 11.02%
• C) 12.89%
• D) 13.00%
• E) 14.12%

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Definitions:

Negligence

A legal concept entailing a failure to exercise appropriate care or a breach of duty that results in harm or damage to another party.

Expedited Funds Availability Act

A law regulating how quickly banks must make deposited funds available to account holders.

Mandatory Availability

A requirement for certain services or products to be available to consumers, often regulated by law or policy.

Cashier's Checks

A check issued by a bank, drawn on its own funds rather than on one of its depositor's accounts, offering a secure way of payment.