Assume Ford Motor Company Is Discussing New Ways to Recapitalize

question 46

Multiple Choice

Assume Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 30% weight in equity, 15% in preferred stock, and 55% in debt. The cost of equity capital is 16%, the cost of preferred stock is 11%, 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) 9.09%
• B) 9.54%
• C) 10.00%
• D) 10.45%

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Definitions:

Dominant-Recessive Pattern

A genetic principle where one allele is dominant over another allele for a particular trait, determining the organism's appearance.

Recessive Trait

A genetic feature that is expressed in an individual only when two copies of the gene responsible for the trait are present.

Dominant Gene

A gene that expresses its phenotypic effect even when heterozygous with a recessive gene, thus overriding the expression of the recessive gene.

Genetic Counselor

A healthcare professional specializing in providing information and support to individuals and families about genetic conditions, including interpreting genetic tests and advising on risk factors and management.