A Firm Has a Total Value of $500,000 and Debt

question 23

Multiple Choice

A firm has a total value of $500,000 and debt valued at $300,000. What is the weighted average cost of capital if the after tax cost of debt is 9% and the cost of equity is 14%?

• A) 7.98%.
• B) 12.125%.
• C) 11.0%.
• D) 10.875%.

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Definitions:

Aging

The process of becoming older, which entails biological, emotional, intellectual, and social changes.

Physical Changes

Alterations in the physical state or appearance of a substance or object, without changing its chemical composition.

Deterioration

The process of becoming progressively worse or the decline in quality or condition.

Mental Abilities

The cognitive capacities that include reasoning, problem-solving, planning, abstract thinking, comprehension, and learning.