PAW Industries Has 5 Million Shares of Common Stock Outstanding

question 98

Multiple Choice

PAW Industries has 5 million shares of common stock outstanding with a market price of $8.00 per share.The company also has outstanding preferred stock with a market value of $10 million,and 100,000 bonds outstanding,each with face value $1,000 and selling at 96 percent of par value.The cost of equity is 19 percent,the cost of preferred is 15 percent,and the cost of debt is 9 percent.If PAW's tax rate is 34 percent,what is the WACC?

• A)10.14 percent
• B)10.38 percent
• C)12.51 percent
• D)14.33 percent

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Definitions:

Glucose Molecule

An essential sugar that acts as a key energy supplier in living entities and makes up part of many carbohydrate structures.

Electron-Transport Chain

A chain of molecular structures that move electrons from donors to acceptors through oxidation-reduction reactions, while simultaneously moving protons (H+ ions) across a membrane.

Hydrogen Ions

Positively charged ions (protons) of hydrogen, H+, which play a significant role in acid-base balance and cellular metabolism.

Plasma Membrane

A bi-layer of lipids and proteins that surrounds a cell, controlling the movement of substances in and out of the cell.