Use the Table for the Question(s) Below

question 69

Multiple Choice

Use the table for the question(s) below.
Consider the following income statement for Kroger Inc. (all figures in $ Millions) :

-Assume that investors hold Google stock in retirement accounts that are free from personal taxes.Also assume that Google's current pre-tax WACC is 12%.If Google were to issue sufficient debt to give them a debt to value ratio of 0.5,then the Google's after-tax WACC would be closest to:

• A) 10.4%
• B) 12.8%
• C) 13.0%
• D) 15.0%
• E) 16.0%

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Definitions:

Total Variable Cost

The sum of all costs that vary with output level, including costs such as labor and materials.

Shut Down

This term refers to a short-term decision made by a firm to cease operations when the market price falls below the minimum average variable cost.

Scale of Production

Refers to the level at which production activities are aggregated or expanded, affecting the unit costs and capability of the production process.

Lower

To decrease in position, value, or condition.