Use the Following Information to Answer the Question(s)below

question 76

Multiple Choice

Use the following information to answer the question(s) below.
Luther Industries has 25 million shares outstanding trading at $18 per share.In addition,Luther has $150 million in outstanding debt.Suppose Luther's equity cost of capital is 13%,its debt cost of capital is 7%,and the corporate tax rate is 40%.
-Luther's weighted average cost of capital is closest to:

• A)9.8%
• B)10.8%
• C)11.5%
• D)13.0%

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Definitions:

Categorical Variable

A variable that can take on values that are names or labels, representing discrete categories or groups.

Scatterplot

A type of graph used in statistics to display values for typically two variables for a set of data, allowing for the observation of relationships.

Cases

Instances or occurrences of a particular disease or condition being studied.

Measured Variables

Variables in an experiment or observational study that are quantified or recorded by the researcher.