Suppose That TipsNToes, Inc

question 94

Multiple Choice

Suppose that TipsNToes, Inc.'s capital structure features 40 percent equity, 60 percent debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 15 percent. If the appropriate weighted average tax rate is 34 percent, what will be TipsNToes' WACC?

• A)9.36 percent
• B)9.56 percent
• C)11.40 percent
• D)24.00 percent

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Definitions:

Freelancers

Independent professionals who offer their services on a task-by-task basis without a long-term commitment to any employer.

Independent Contractors

Individuals who provide services to another entity under terms specified in a contract or within a freelance agreement, rather than as employees.

Performance Effectiveness

An output measure of task or goal accomplishment.

Outputs

The final products, services, or results produced by a process, system, or organization.