Solve for the Weighted Average Cost of Capital A)700 Percent
B)6

question 9

Multiple Choice

Solve for the weighted average cost of capital. $\begin{array}{lcl}13.60 \%&=&K_{1}&=&\text { cost of equity capital for a leveraged firm }\\3 / 4&=&\lambda&=&\text { debt-to-total-market-value ratio }\\8.0 \%&=&i&=&\text { before-tax borrowing cost }\\40.0 \%&=&\tau&=&\text { marginal corporate income tax rate }\end{array}$

• A)7.00 percent
• B)6.89 percent
• C)6.73 percent
• D)6.67 percent

---

Definitions:

Option's Disadvantages

The negative aspects or drawbacks associated with a particular choice or decision.

Sensitivity

The ability of a test or system to correctly identify those with a condition, reflecting how well it detects true positives.

Satisficed

Made a decision that is satisfactory and sufficient, stemming from the combination of "satisfy" and "suffice."

Optimal Choice

The best possible selection among various alternatives based on specific criteria or conditions.