Suppose That TNT, Inc

question 66

Multiple Choice

Suppose that TNT, Inc. has a capital structure of 43 percent equity, 23 percent preferred stock, and 34 percent debt. If the before-tax component costs of equity, preferred stock and debt are 15.4 percent, 10 percent and 7 percent, respectively, what is TNT's WACC if the firm faces an average tax rate of 28 percent?

• A)9.45 percent
• B)10.64 percent
• C)10.80 percent
• D)11.30 percent

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Definitions:

Slope

Slope indicates the steepness or incline of a line, defined as the ratio of the vertical change to the horizontal change between two points on the line.

Curved Line

a line that continuously moves away from a straight direction but does not change in its degree of curvature.

Inclusive Language

The deliberate selection and use of vocabulary that avoids the exclusion of particular groups and that avoids the use of false generic terms (Canadian Race Relations Foundation, 2017).

Female Professor

A woman who holds a professorship at a college or university, engaged in teaching and often involved in research in her field of expertise.