What Is the WACC for a Firm with 50% Debt

question 14

Multiple Choice

What is the WACC for a firm with 50% debt and 50% equity that pays 12% on its debt,20% on its equity,and has a 40% tax rate?

• A) 9.6%
• B) 12.0%
• C) 13.6%
• D) 16.0%

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Definitions:

Actual Product

The tangible physical item or service that is being offered to consumers, including its features, design, brand name, and quality.

Shopping Product

A category of consumer goods that require considerable thought and effort in selection because they possess attributes such as quality, price, and style that are significant to the buyer.

Backpacking Trip

A form of low-cost, independent travel that involves carrying all necessary gear and belongings in a backpack for hiking, camping, or traveling.

Alternatives

Other options available to consumers in the marketplace that compete with a specific product or service.