Zolar Corp

question 11

Multiple Choice

Zolar Corp. The following data pertains to Zolar Corp., a manufacturer of ball bearings (dollar amounts in millions) :
Assume that Zolar is a potential leveraged buyout candidate. Assume that the buyer intends to put in place a capital structure with that has 70 percent debt with a pre tax borrowing cost of 14 percent and 30 percent common equity. Compute the weighted average cost of capital for Zolar based on the new capital structure.

• A) 20.63%
• B) 12.56%
• C) 13.01%
• D) 9.94%

---

Definitions:

Nitrogen

A chemical element with symbol N and atomic number 7, essential for all living organisms and a major component of amino acids, proteins, and nucleic acids.

Molecular Ion

An ion formed by the removal or addition of an electron to a molecule during mass spectrometry.

Basic

Refers to substances that can accept protons or donate electrons, characterized by a high pH value when dissolved in water.

Amines

Organic compounds and functional groups that contain a basic nitrogen atom with a lone pair, typically derived from ammonia by replacing one or more hydrogen atoms with hydrocarbon groups.