What Is the WACC for a Firm Financed with 30

question 50

Multiple Choice

What is the WACC for a firm financed with 30% debt if the debt investors require a return of 12.5% and equity investors require a 16% return? The corporate tax rate is 20%.

• A) 11.8%
• B) 13.3%
• C) 14.2%
• D) 14.8%

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Definitions:

Import

Products or services that are transported into a country from another with the intent to sell them.

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than others, leading to more efficient trade and resource allocation.

Opportunity Cost

The value of the best alternative foregone as a result of making a particular choice or decision.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost compared to its competitors.