Southwest Tours Currently Has a Weighted Average Cost of Capital

question 10

Multiple Choice

Southwest Tours currently has a weighted average cost of capital of 11.3 percent based on a combination of debt and equity financing. The firm has no preferred stock. The current debt-equity ratio is 0.58 and the aftertax cost of debt is 6.4 percent. The company just hired a new president who is considering eliminating all debt financing. All else constant, what will the firm's cost of capital be if the firm switches to an all-equity firm?

• A) 11.45 percent
• B) 12.62 percent
• C) 12.89 percent
• D) 13.37 percent
• E) 14.14 percent

Grasp the importance and methodology of creating an exposure hierarchy using the SUDS (Subjective Units of Distress Scale).

Identify the potential advantages and disadvantages of using virtual reality in exposure therapy.

Recognize the need for and methods of incorporating relaxation techniques during exposure therapy.

Understand the role of counterconditioning and reciprocal inhibition in exposure therapy.

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Definitions:

Incongruity

A state of being out of harmony or lacking agreement between elements.

Privately Owned

Refers to assets, companies, or property owned by an individual or a corporation and not by the government or public.

Women Owned

Pertains to businesses or enterprises that are majority-owned by women.

Double Standard

The unfair application of different sets of principles for similar situations, or to different people in the same situation.