Swirlpool, Inc

question 54

Multiple Choice

Swirlpool, Inc. has a WACC of 11%, cost of debt of 8%, and a cost of equity of 12%. What must the debt-to-equity ratio be if the firm pays no tax?

• A) 1/2
• B) 1/4
• C) 1/6
• D) 1/3

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Definitions:

Revenue Forgone

Potential income not earned or lost by choosing an alternative action, representing the opportunity cost of decisions.

Total Cost Method

A accounting approach that involves direct costs, indirect costs, and fixed and variable expenses to determine the overall cost of a product.

Manufacturing Costs

Expenses directly associated with the production of goods, including materials, labor, and overhead.

Total Cost Method

This method involves identifying the total cost of producing goods or services, including both fixed and variable costs.