The Financing Structure of Taylor Communications Is as Follows The Weighted Cost of Debt Is
A) 2

question 100

Multiple Choice

The financing structure of Taylor communications is as follows:
$\begin{array}{lcc}\text {Source of Capital}&\text {Proportion of capital}&\text {Cost of Capital}\\\hline \text { Debt financing, } \$ 300,000 & 30 \% & 6 \% \\\text { Preferred stock, } \$ 100,000 & 10 \% & 8 \% \\\text { Common stock, } \$ 400,000 & 40 \% & 12 \% \\\text { Retained earnings, } \$ 200,000 & 20 \% & 12 \%\end{array}$

The weighted cost of debt is

• A) 2.4%
• B) 4.8%
• C) .8%
• D) 1.8%

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Definitions:

Odd Pricing

A pricing strategy that involves setting prices just below round numbers (e.g., $9.99 instead of $10) to make products appear cheaper to consumers.

Gray Market Activity

The trade of a commodity through distribution channels that, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.

Luxury Watches

High-end, often expensive timepieces that are considered a symbol of status and craftsmanship, combining precision in timekeeping with elaborate design and materials.

Cheaper Market

A market characterized by lower prices, often due to lower cost of living, production, or services compared to other markets.