A Firm Has 4,000,000 Shares of Stock Outstanding with a Price

question 8

Multiple Choice

A firm has 4,000,000 shares of stock outstanding with a price per share equal to $22.There are 200,000 bonds outstanding each priced at $995 each.The cost of equity is 14 percent,the cost of debt is 8 percent,and the corporate tax rate is 34 percent.What is the WACC?

• A)10.3 percent.
• B)9.8 percent.
• C)8.0 percent.
• D)8.8 percent.

---

Definitions:

Viagra

A pharmaceutical drug used to treat erectile dysfunction by increasing blood flow to the penis, aiding in maintaining an erection.

Estrogen

Estrogen is a primary female sex hormone responsible for the development and regulation of the female reproductive system and secondary sexual characteristics.

Testosterone-Replacement Therapy

A form of hormone therapy in which testosterone is supplemented in cases where its natural production is insufficient.

Serotonin-Replacement Therapy

A treatment aimed at restoring normal serotonin levels in the brain, often used to treat depression and other mood disorders.