A Firm Has Debt of $5,000,equity of $16,000,a Leveraged Value

question 47

Multiple Choice

A firm has debt of $5,000,equity of $16,000,a leveraged value of $8,900,a cost of debt of 8%,a cost of equity of 12%,and a tax rate of 34%. What is the firm's weighted average cost of capital?

• A) 7.29%
• B) 7.94%
• C) 8.87%
• D) 10.40%
• E) 11.05%

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Definitions:

Sampling Distribution

The probability distribution of a statistic (for example, a mean, variance) obtained from a large number of samples drawn from a specific population.

Confidence Interval

A span of numbers obtained from sample data which is expected to encompass the value of a not yet known population characteristic, specified with a defined degree of certainty.

Degrees Of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution or calculation, affecting the shape of the distribution.

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter, with a specified level of confidence.