Mirion Tech, Inc

question 71

Multiple Choice

Mirion Tech, Inc., has r_E of 12 percent, an r_D of 6 percent, at a debt-equity ratio of 0.50.Mirion plans to raise enough preferred stock to retire half of their outstanding common stock, which currently has a market value of $7 million.If the preferred stock has an expected rate of return of 10 percent, what is the new WACC? (Assume a 35 percent marginal corporate tax rate and that r_D remains at 6 percent.)

• A)14.23 percent
• B)11.02 percent
• C)9.30 percent
• D)6.60 percent

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Definitions:

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time; the lowest level at which an individual can experience a sensation.

Difference Threshold

The smallest change in sensation that can be perceived half the time by an individual, also referred to as the just noticeable difference (JND).

Cataracts

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Signal Detection Theory

An approach to evaluate the capability of identifying information-carrying patterns from random ones that interfere with the information.