Ronnie's Comics Has Found That Its Cost of Common Equity

question 54

Multiple Choice

Ronnie's Comics has found that its cost of common equity capital is 15 percent and its cost of debt capital is 12 percent. The firm is financed with $250,000,000 of common shares (market value) and $750,000,000 of debt. What is the after-tax weighted average cost of capital for Ronnie's, if it is subject to a 35 percent marginal tax rate?

• A) 6.05%
• B) 9.6%
• C) 8.75%
• D) 13.65%

---

Definitions:

Graduate School

An advanced program of study focused on a particular academic discipline or profession, typically pursued after obtaining an undergraduate degree.

Education Level

Refers to the highest degree or level of school completed or the highest degree received.

Downtown Washington

Refers to the central business district of Washington, D.C., known for its historical and political landmarks.

Freshman Year

The first year of a student's journey in higher education or high school.