The Required Return on Assets Is 18

question 31

Multiple Choice

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

• A)12.15%
• B)13.02%
• C)14.33%
• D)23.45%
• E)None of the above

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Definitions:

Relationship Selling

A sales approach that focuses on building long-term relationships with customers, emphasizing trust, understanding customer needs, and providing tailored solutions.

Invalidating Opinions

The act of dismissing or undermining someone's viewpoints as without basis or merit.

Salesperson's Knowledge

Refers to the information, expertise, and understanding a salesperson has about their product, market, and customer needs.

Customer Relationship Marketing

A strategic approach focusing on building and sustaining long-term relationships with customers for loyalty and repeat business.