Assume Ford Motor Company Is Discussing New Ways to Recapitalize

question 23

Multiple Choice

Assume Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 10% weight in equity, 20% in preferred stock, and 70% in debt. The cost of equity capital is 16%, the cost of preferred stock is 10%, and the pretax cost of debt is 8%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?

• A) 6.61%
• B) 6.96%
• C) 7.31%
• D) 7.66%

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Definitions:

Body Weight

The total mass of an individual's body, often measured to assess health, nutrition, and fitness outcomes.

Gender Socialization

The process of learning the social expectations and attitudes associated with one's sex, often through institutions such as the family, education systems, and media.

Internalizing Disorders

A category of mental health disorders characterized by internal struggles, such as depression or anxiety, where symptoms are primarily directed inward.

Externalizing Disorders

Behaviors that are directed outwardly, typified by aggressive, disruptive, or noncompliant actions, often seen in childhood and adolescence.