Use the Information Below to Answer the Following Question(s)

question 114

Multiple Choice

Use the information below to answer the following question(s) .Brandorf Company has two sources of funds: long term debt with a market and book value of $9 million issued at an interest rate of 10 percent; and, equity capital that has a market value of $6 million (book value of $2 million) .The cost of equity capital is 5 percent, while the tax rate is 30 percent.Brandorf Company has profit centres in the following locations with the following data:

-A company's weighted-average cost of capital [WACC] was 9.6% last year.The company has $6,000,000 of bonds payable (its only debt) with a 9.25% coupon, and has $9,000,000 in equity capital.The tax rate is 35%.What is the company's cost of debt funding?

• A)6.01%
• B)6.25%
• C)6.50%
• D)9.25%
• E)12.00%

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Definitions:

Cerebral Cortex

The outer layer of the cerebrum in the brain, involved in high-level functions like consciousness, thought, emotion, reasoning, language, and memory.

Occipital Lobe

The region of the brain located at the back of the head, responsible for processing visual information.

Visual Perception

The ability to interpret the surrounding environment using light in the visible spectrum reflected by the objects in the environment.

Cerebral Cortex

The outer layer of neural tissue of the cerebrum in the brain, playing a key role in memory, attention, perception, cognition, awareness, thought, language, and consciousness.