The Capital Structure for the CR Corporation Includes Bonds Valued

question 97

Multiple Choice

The capital structure for the CR Corporation includes bonds valued at $5,500 and common stock valued at $11,000.If CR has an after-tax cost of debt of 6%,and a cost of common stock of 16%,what is its WACC?

• A) 9.33%
• B) 12.67%
• C) 13.33%
• D) 14.67%

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Definitions:

Corporation Act

Legislation that governs the behavior of corporations, detailing the legal requirements for forming, operating, and dissolving a corporation.

Voluntary Winding Up

The process of liquidating a company's assets and ceasing operations based on the decision of its shareholders or members, rather than by order of a court.

Liquidator

A person or entity appointed to oversee the winding up of a company, managing the process of disposing of assets and paying creditors.

Shareholders' Distribution

Payments made by a corporation to its shareholder members, which can include dividends, stock shares, or other forms of assets.