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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Definitions:

Type A Personality Traits

Characteristics typically including competitiveness, urgency, aggression, and a high level of stress.

External Locus of Control

The belief that one's life events are largely due to external factors or forces beyond one's control.

Low Self-esteem

A condition characterized by a lack of confidence and feeling unworthy or incapable, often affecting one's mental health and interactions.

Self-efficacy Expectations

Beliefs about one's ability to perform behaviors necessary to achieve desired outcomes.