Assume Ford Motor Company Is Discussing New Ways to Recapitalize

question 21

Multiple Choice

Assume Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 25% weight in equity, 10% in preferred stock, and 65% in debt. The cost of equity capital is 13%, the cost of preferred stock is 9%, and the pretax cost of debt is 8%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?

• A) 6.91%
• B) 7.27%
• C) 8.00%
• D) 8.36%

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Definitions:

I/O Leakage

Unintended current that flows through the input/output circuitry of a device, even in its off state, potentially causing erroneous readings or operations.

Solid-state Switching

Solid-state Switching involves the use of semiconductor devices to control the flow of electricity without moving parts, offering advantages in durability and response time.

Grounding Requirements

refer to the essential criteria for establishing electrical connections to the earth to ensure safety and prevent electrostatic discharge.

National Electrical Code

The National Electrical Code (NEC) is a widely adopted standard for the safe installation of electrical wiring and equipment in the United States, aiming to protect people and property from electrical hazards.