Klein Corporation Has Provided the Following Data The Company's Equity Multiplier Is Closest To:
A)1

question 144

Multiple Choice

Klein Corporation has provided the following data: $$\begin{array} { | l | r | r | } \hline & \text { Year 2 } & \text { Year 1 } \\\hline \text { Total assets } & \$ 1,337,000 & \$ 1,310,000 \\\hline \text { Total liabilities } & \$ 598,000 & \$ 580,000 \\\hline \begin{array} { l } \text { Total stockholders' } \\\text { equity }\end{array} & \$ 739,000 & \$ 730,000 \\\hline\end{array}$$ The company's equity multiplier is closest to:

• A)1.24
• B)0.56
• C)1.80
• D)0.81

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionally weighted.

Perpetuity

An annuity in which the cash flows continue forever.

Preferred Stock

A class of share capital that provides shareholders with a fixed dividend payment prior to any dividends being paid to common stockholders and typically does not confer voting rights.

Cost Computation

The process of calculating the total cost involved in manufacturing a product or providing a service.