Assume Time Warner Shares Have a Market Capitalization of $60

question 66

Multiple Choice

Assume Time Warner shares have a market capitalization of $60 billion. The company is expected to pay a dividend of $0.30 per share and each share trades for $40. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 8%. If the firm's tax rate is 35%, compute the WACC?

• A) 6.05%
• B) 6.40%
• C) 6.76%
• D) 7.11%

---

Definitions:

Accessory

An additional item or product that enhances or contributes to the utility or aesthetics of the primary product.

Vagus

Referring to the vagus nerve, a crucial part of the body's autonomic nervous system influencing heart rate, digestion, and more.

Cerebral Angiography

A medical imaging procedure that visualizes the blood vessels in and around the brain, often used to evaluate conditions like aneurysms and stenosis.

Bleeding

The loss of blood from the circulatory system, which can occur internally or externally due to injury or disease.