A Firm Has Debt of $5,000,equity of $16,000,a Cost of Debt

question 24

Multiple Choice

A firm has debt of $5,000,equity of $16,000,a cost of debt of 8 percent,a cost of equity of 12 percent,and a tax rate of 21 percent.What is the firm's weighted average cost of capital?

• A)10.20 percent
• B)9.94 percent
• C)10.90 percent
• D)10.65 percent
• E)11.05 percent

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Definitions:

Evidence

Evidence refers to information, facts, or data presented to support a claim, assertion, or hypothesis.

Generalization

A broad statement or conclusion that applies to many instances, derived from specific cases.

Positive Instance

An item that belongs to a given class and possesses the trait attributed to the class by a given generalization.

Negative Instance

An item that belongs to a given class and does not possess the trait attributed to the class by a given generalization.