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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Definitions:

Natural Resources

Assets occurring in nature, such as mineral deposits, timber tracts, oil, and gas

Tangible Assets

Physical assets that hold value, such as land, buildings, vehicles, equipment, and inventory.

Operating Rights

The granted permissions or authorizations for a company to conduct specific operations within a regulatory or legal framework.

Natural Resources

Physical or material resources occurring in nature that can be used for economic gain, such as water, timber, coal, oil, and minerals.