The Lever Crowbar Company Has a Target Capital Structure of 70

question 169

Multiple Choice

The Lever Crowbar Company has a target capital structure of 70 percent debt and 30 percent equity with no preferred stock.  The firm doesn't plan to raise equity capital beyond next year's retained which have a cost of 15%.  Debt costs the company 8 percent before taxes of 40%. What is Lever's weighted average cost of capital.

• A)4.50%
• B)14.0%
• C)7.60%
• D)7.86%

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