Time Warner Shares Have a Market Capitalization of $50 Billion

question 93

Multiple Choice

Time Warner shares have a market capitalization of $50 billion.The company is expected to pay a dividend of $0.30 per share and each share trades for $30.The growth rate in dividends is expected to be 7% per year.Also,Time Warner has $15 billion of debt that trades with a yield to maturity of 8%.If the firm's tax rate is 30%,what is the WACC?

• A)6.55%
• B)7.24%
• C)7.45%
• D)7.91%

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Key or important aspects, facts, or features that are noteworthy.

Higher Price

The strategy of setting the cost of a product or service above the average market price to signal higher quality or to cover higher production costs.

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