Assume Ford Motor Company Is Discussing New Ways to Recapitalize

question 21

Multiple Choice

Assume Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 25% weight in equity, 10% in preferred stock, and 65% in debt. The cost of equity capital is 13%, the cost of preferred stock is 9%, and the pretax cost of debt is 8%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?

• A) 6.91%
• B) 7.27%
• C) 8.00%
• D) 8.36%

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Definitions:

Special Recognition

The act of acknowledging or rewarding an individual's or group's achievements, often to motivate and encourage continued effort and success.

Hard Work

Consistent, dedicated effort to achieve specific tasks or goals, often requiring persistence and resilience.

Employee Behavior

Employee behavior encompasses the actions and conduct of individuals within the workplace, influenced by factors like organizational culture, leadership, and personal ethics.

Reinforcement

In behavioral psychology, a principle that strengthens a behavior by providing a consequence an individual finds rewarding.