Taylor's Has a Beta of

question 69

Multiple Choice

Taylor's has a beta of .78 and a debt-to-equity ratio of .2.The market rate of return is 10.6 percent,the tax rate is 34 percent,and the risk-free rate is 1.4 percent.The pretax cost of debt is 6.1 percent.What is the firm's WACC?

• A)8.08%
• B)7.67%
• C)8.16%
• D)9.96%
• E)7.82%

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Definitions:

Durable Goods

Goods that are designed to last and be used over a long period, such as vehicles, appliances, and furniture.

Nondurable Goods

Goods that are consumed or are only usable for a short period of time before they are depleted or become useless.

Consumer Spending

The total amount of money spent by individuals and households on goods and services for personal use, a key driver of economic activity.

Disposable Income

Monetary assets available for households to invest in spending and saving after tax obligations.