Suppose That T-Shirts, Inc

question 88

Multiple Choice

Suppose that T-shirts, Inc.'s capital structure features 25 percent equity, 75 percent debt, and that its before-tax cost of debt is 8 percent, while its cost of equity is 12 percent. If the appropriate weighted average tax rate is 30 percent, what will be T-shirts' WACC?

• A)9.00 percent
• B)7.20 percent
• C)5.10 percent
• D)4.75 percent

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Definitions:

Oxiranes

Another term for epoxides, which are three-membered cyclic ethers known for their reactivity and usefulness in synthesizing other compounds.

Oxetanes

Four-membered cyclic ethers with the formula C3H6O, known for their role in organic synthesis, particularly in polymer formulations and drug discovery.

Pyrans

A class of heterocyclic organic compounds characterized by a six-membered ring containing one oxygen atom and five carbon atoms.

Dimethyl Ether

A colorless gas used as a propellant, refrigerant, and solvent, composed of two methyl groups bonded to an oxygen atom.