A Firm Wants to Create a Weighted Average Cost of Capital

question 87

Multiple Choice

A firm wants to create a weighted average cost of capital (WACC) of 10.4 percent. The firm's cost of equity is 14.5 percent and its pre-tax cost of debt is 8.5 percent. The tax rate is 34 percent. What does the debt-equity ratio need to be for the firm to achieve its target WACC?

• A) 0.51
• B) 0.57
• C) 0.62
• D) 0.70
• E) 0.86

Recognize comprehensive environmental standards and their role in promoting sustainability.

Understand the principles of green marketing and the ethical considerations associated with greenwashing.

Comprehend the role and influence of the Environmental Protection Agency (EPA) in environmental regulation.

Grasp the concept and importance of recycling in waste management and environmental sustainability.

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Definitions:

Sales Territory

A specific geographical area or group of customers assigned to a salesperson or team for the purpose of marketing and selling products or services.

Common Fixed Expenses

Expenses that remain constant in total regardless of changes in the level of activity or volume of output and are shared by more than one segment of a business.

Contribution Margin

Contribution margin is the revenue remaining after subtracting variable costs, used to cover fixed costs and generate profit, highlighting the profitability of individual products.

Business Segments

Parts or divisions of a company that operate within distinct markets or industries, often reported separately in financial statements for analysis.