Use the Data Provided on Cadbury to Answer the Question

question 4

Multiple Choice

Use the data provided on Cadbury to answer the question below.The risk free rate is 4.25%.The expected return on the market portfolio is 9.75%.The corporate tax rate is 40%.The face value of Cadbury's outstanding bonds is 2.450 billion pounds sterling.The coupon rate on Cadbury's bonds is 4.5%.Assume that the bonds pay annual coupons.The yield to maturity on Cadbury's bonds is 4.5%.Cadbury's bonds mature in 7 years.Cadbury has 1.650 billion common shares outstanding.The market price of Cadbury's common shares as of Dec 31,2008 is 6.25 pounds sterling.Cadbury's Beta is 0.8.What is the capital structure weight for equity?

• A) 0.149
• B) 0.192
• C) 0.808
• D) 0.851
• E) 0.862

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Definitions:

First Morning Urine

The first urination after waking up, often used in medical testing as it is more concentrated and can provide more accurate results.

Random Urine

A urine sample taken at any given time, without any prior preparation, used for general or specific medical testing.

Specimen

A sample or part taken from a living organism or the environment for the purpose of scientific examination.