Assume That Investors Hold Google Stock in Retirement Accounts That

question 39

Multiple Choice

Assume that investors hold Google stock in retirement accounts that are free from personal taxes.Also assume that Google's current pre-tax WACC is 14%.If Google were to issue sufficient debt at a pre-tax cost of 7% to give them a debt to value ratio of 0.5,then the Google's after-tax WACC would be closest to:

• A)10.4%
• B)12.8%
• C)13.0%
• D)15.0%
• E)16.0%

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