Zonk Corp the Following Data Pertains to Zonk Corp

question 7

Multiple Choice

Zonk Corp. The following data pertains to Zonk Corp.,a manufacturer of ball bearings (dollar amounts in millions) :
Assume that Zonk is a potential leveraged buyout candidate.Assume that the buyer intends to put in place a capital structure that has 70 percent debt with a pre tax borrowing cost of 14 percent and 30 percent common equity.Compute the weighted average cost of capital for Zonk based on the new capital structure.

• A) 20.63%
• B) 12.56%
• C) 13.01%
• D) 9.94%

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