Rearden Metal Currently Has No Debt and an Equity Cost

question 93

Multiple Choice

Rearden Metal currently has no debt and an equity cost of capital of 14%.Suppose that Rearden decides to increase its leverage and maintain a market debt-to-value ratio of 1/2.Suppose Rearden's debt cost of capital is 8% and its corporate tax rate is 40%.Assuming that Rearden's pre-tax WACC remains constant,then with the addition of leverage its effective after-tax WACC will be closest to:

• A)10.8%
• B)12.4%
• C)12.8%
• D)13.4%

Understand the importance and application of the 5 Ws and H in PR writing.

Grasp the concept of narrative elements and their importance in storytelling within PR.

Recognize the roles and writing styles distinct to PR, speeches, and news releases as per AP style and other guidelines.

Understand the strategic use of digital and social media for broader and more effective reach in PR.

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Definitions:

Single-Step Form

A simplified income statement format that consolidates all revenues and expenses into single categories to calculate net income.

Income Statement

A report highlighting a company’s income and expenditures within a given timeframe, leading to a final net gain or deficit.

FOB Destination

A shipping term indicating that the seller bears the shipping costs and retains ownership of the goods until they are delivered and accepted by the purchaser.

Ending Inventory

The combined worth of sales-ready goods at the close of a financial period.