Elway Electronics Has Debt with a Market Value of $350,000,preferred

question 88

Multiple Choice

Elway Electronics has debt with a market value of $350,000,preferred stock with a market value of $150,000,and common stock with a market value of $450,000.If debt has a cost of 8%,preferred stock a cost of 10%,common stock a cost of 12%,and the firm has a tax rate of 30%,what is the WACC?

• A)8.64%
• B)9.12%
• C)9.33%
• D)9.46%

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Definitions:

Pacemaker

A medical device implanted in the chest to help control abnormal heart rhythms by using electrical pulses to prompt the heart to beat at a normal rate.

Abnormal Heart Rhythm

A condition where the heart beats too fast, too slow, or with an irregular pattern.

Insulin

A hormone produced by the pancreas that regulates blood glucose levels by facilitating the uptake of glucose into cells.

Pancreas

A gland behind the stomach that produces enzymes for digestion and hormones such as insulin to regulate blood sugar levels.