Werner Corporation Has a Target Capital Structure That Consists of 40

question 70

Multiple Choice

Werner Corporation has a target capital structure that consists of 40% debt and 60% equity. Werner can borrow at an interest rate of 10%. Also, Werner has determined its cost of equity to be 14%. Werner's tax rate is 40%. What is Werner's weighted average cost of capital?

• A) 10.80%
• B) 12.40%
• C) 9.20%
• D) None of the above

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