Maloney's, Inc

question 19

Multiple Choice

Maloney's, Inc. has found that its cost of common equity capital is 17 percent and its cost of debt capital is 6 percent. The firm is financed with $3,000,000 of common shares (market value) and $2,000,000 of debt. What is the after-tax weighted average cost of capital for Maloney's, if it is subject to a 40 percent marginal tax rate?

• A) 8.96%
• B) 11.16%
• C) 11.64%
• D) 12.60%

---

Definitions:

Simple Delivery Contract

A contract that is fulfilled by the straightforward delivery of a product or service without the need for complicated procedures or requirements.

Merchant

An individual or business entity engaged in the selling and purchasing of goods or services, often involved in trade at a larger scale.

Destroyed

To damage something so badly that it no longer exists, works, or has value.

Common Carrier

is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport.