Clothier,Inc

question 40

Multiple Choice

Clothier,Inc.has a target capital structure of 40% debt and 60% common equity,and has a 40% marginal tax rate.If Clothier's yield to maturity on bonds is 7.5% and investors require a 15% return on Clothier's common stock,what is the firm's weighted average cost of capital?

• A) 7.20%
• B) 10.80%
• C) 12.00%
• D) 12.25%

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Definitions:

Homogeneous Products

Goods that are essentially identical in quality and function, making them indistinguishable from one another to consumers.

Process Costing Systems

Accounting methods used to allocate production costs to products or services in continuous processes, where the products are indistinguishable from each other.

Repetitive Products

Goods that are mass-produced, usually on an assembly line, with little variation in design for each unit produced.

Opening Work In Process

The value of the products that were in the process of being manufactured at the beginning of an accounting period.