Mullineaux Corporation Has a Target Capital Structure of 41 Percent

question 8

Multiple Choice

Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent preferred stock, and 55 percent debt. Its cost of equity is 19 percent, the cost of preferred stock is 6.5 percent, and the pre-tax cost of debt is 7.5 percent. What is the firm's WACC given a tax rate of 34 percent?

• A)9.87 percent
• B)10.43 percent
• C)10.77 percent
• D)13.38 percent
• E)15.17 percent

---

Definitions:

Parachute

A device used for slowing down an object in motion, especially from a high altitude, by creating drag.

Employment Data

Statistical information related to the labor market, including figures on employment, unemployment, job creation, and workforce demographics.

Screening Phone Call

A preliminary telephone call to determine the caller's intent or the relevance of the call before any substantive conversation takes place.

Firm Handshake

A strong and solid grip exchanged between two people upon meeting or agreeing, often interpreted as a sign of confidence and reliability.