Andrea's Markets Has Debt of $318,200,equity of $493,500,an Aftertax Cost

question 9

Multiple Choice

Andrea's Markets has debt of $318,200,equity of $493,500,an aftertax cost of debt of 6.80 percent,a cost of equity of 13.39 percent,and a tax rate of 34 percent.What is the firm's weighted average cost of capital?

• A)9.90%
• B)10.94%
• C)9.87%
• D)10.81%
• E)10.05%

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Definitions:

Guarantee

A collateral promise (in writing) to answer for the debt of another (the principal debtor) if the debtor should default in payment.

Demand for Payment

A formal request issued by a creditor to a debtor requiring payment of an outstanding debt by a specific date.

Guarantee

A formal assurance or promise, typically in writing, that certain conditions will be fulfilled, including the quality and durability of a product or service.

Writing

The act or process of composing text or inscriptions.