Suppose That TNT, Inc

question 66

Multiple Choice

Suppose that TNT, Inc. has a capital structure of 43 percent equity, 23 percent preferred stock, and 34 percent debt. If the before-tax component costs of equity, preferred stock and debt are 15.4 percent, 10 percent and 7 percent, respectively, what is TNT's WACC if the firm faces an average tax rate of 28 percent?

• A)9.45 percent
• B)10.64 percent
• C)10.80 percent
• D)11.30 percent

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Definitions:

Open Markets

Economic systems or environments characterized by free trade, with minimal governmental restrictions on business operations and transactions.

Globalization

Refers to the process of deeper integration and interaction among people, companies, and governments worldwide, primarily due to advances in communication and trade.

Domestic Business Markets

Markets within a country's borders where goods and services are bought and sold.

Skills Shortage

A situation where the demand for specific skills exceeds the supply of individuals who have those skills within the labor market.