XYZ Industries Has 10 Million Shares of Stock Outstanding Selling

question 119

Multiple Choice

XYZ Industries has 10 million shares of stock outstanding selling at $10 per share and an issue of $30 million in 8.5 percent, annual coupon bonds with a maturity of 25 years, selling at 102 percent of par ($1,000) . If XYZ's weighted average tax rate is 40 percent and its cost of equity is 15 percent, what is XYZ's WACC?

• A)8.06 percent
• B)11.75 percent
• C)12.65 percent
• D)13.43 percent

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Definitions:

Causality

Describes a relationship where one event (the cause) directly affects the outcome of another event (the effect).

Normative Question

Involves value judgments about what ought to be and discusses what should be done based on subjective criteria.

Regressive Nature

Regressive nature typically refers to a situation or policy that disproportionately affects those with lower incomes more adversely than those with higher incomes.

Excise Tax

A tax levied on specific goods, services, or transactions, often included in the price of the product or service.