Given an Optimal Capital Structure That Is 50% Debt and 50

question 14

Multiple Choice

Given an optimal capital structure that is 50% debt and 50% common stock, calculate the weighted average cost of capital for Stone Corp. given the following additional information: Bond coupon rate………………..8%
Bond yield to maturity…………..6%
Dividend, expected……………..$5
Price, common………………….$80
Growth rate…………………….5%
Corporate tax rate………………30%

• A)Less than 5.0%.
• B)More than 5.0% and less than 6.25%.
• C)More than 6.25% and less than 7.5%.
• D)More than 7.5%.

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Definitions:

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The process of transferring goods from one party to another.

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Tangible or intangible items that belong to an individual or business, excluding real estate.

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The individual or entity that holds the legitimate rights to ownership or possession of property.

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An individual who locates and takes possession of an item that was lost or unclaimed.