Wilson's Has 10,000 Shares of Common Stock Outstanding at a Market

question 47

Multiple Choice

Wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share.The firm also has a bond issue outstanding with a total face value of $250,000 which is selling for 102 percent of face value.The cost of equity is 11 percent while the pre-tax cost of debt is 8 percent.The firm has a beta of 1.1 and a tax rate of 34 percent.What is Wilson's weighted average cost of capital?

• A) 8.59 percent
• B) 8.72 percent
• C) 9.08 percent
• D) 9.63 percent
• E) 10.05 percent

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Definitions:

Rods And Cones

The two types of photoreceptor cells in the retina of the eye that are responsible for vision; rods detect light and darkness, while cones are responsible for color vision.

Salivary Gland

An exocrine gland in the mouth that produces saliva, which aids in digestion and helps maintain oral health.

Hair Cells

Specialized cells located in the inner ear that convert sound waves into electrical signals which can be interpreted by the brain.

Basilar Cells

Specialized cells found in the organ of Corti within the cochlea of the inner ear, which play a role in the hearing process by supporting the hair cells responsible for converting sound vibrations into electrical signals.