The Required Return on Assets Is 18 Percent

question 6

Multiple Choice

The required return on assets is 18 percent.The firm can borrow at 12.5 percent; firm's target debt to value ratio is 3/5.The corporate tax rate is 34 percent,and the risk-free rate is 4 percent and the market risk premium is 9.2 percent. What is the weighted average cost of capital?

• A)12.15 percent
• B)13.02 percent
• C)14.33 percent
• D)23.45 percent

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