Central Systems,Inc

question 34

Multiple Choice

Central Systems,Inc.desires a weighted average cost of capital of 8 percent.The firm has an aftertax cost of debt of 5.4 percent and a cost of equity of 15.2 percent.What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

• A)0.38
• B)0.44
• C)1.02
• D)2.77
• E)3.63

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Definitions:

Cytoplasm

The material within a living cell, excluding the nucleus, containing organelles, and involved in cell metabolism and growth.

Posttranslational Control

Regulatory mechanisms that modify a protein’s function after it has been synthesized.

Amino Acids

Organic compounds that serve as the building blocks of proteins, containing both an amino group and a carboxyl group.

Codons

Sequences of three nucleotides in mRNA that specify the addition of a specific amino acid into a polypeptide chain during protein synthesis.