Precision Cuts Has a Target Debt-Equity Ratio of

question 33

Multiple Choice

Precision Cuts has a target debt-equity ratio of .48.Its cost of equity is 16.4 percent, and its pretax cost of debt is 8.2 percent.If the tax rate is 34 percent, what is the company's WACC?

• A)13.20 percent
• B)11.72 percent
• C)12.91 percent
• D)11.28 percent
• E)12.84 percent

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Definitions:

Unenforceable

A term applied to a contract or clause that, for legal reasons, cannot be enforced by a court.

Undue Influence

A situation where an individual is able to influence another person's decisions due to the power or trust they hold over them, often leading to unfair outcomes.

Duress

Duress occurs when someone performs an act as a result of coercion or a threat of immediate danger to life or personal safety, which compromises the voluntariness of their decision.

Valid Contract

An agreement between parties that meets all legal requirements and is enforceable by law.