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:

American Colonization Society

An organization established in the early 19th century to support the migration of free African Americans to Africa.

African Colony

Refers to the territories in Africa that were under the control and rule of European powers during the era of New Imperialism, starting from the late 19th century.

Liberia

A country on the West African coast, founded in the 19th century by freed American and Caribbean slaves as a colony for African-American resettlement.

Black Shipbuilder

Refers to an African American or an individual of African descent who is skilled in designing, constructing, and repairing ships.