Using the WACC in Practice: Poly's Parrot Shops Has Found

question 4

Multiple Choice

Using the WACC in practice: Poly's Parrot Shops has found that its cost of common equity capital is 17 percent. It has 7-year maturity semiannual bonds outstanding with a price of $767.03 that have a coupon rate of 7 percent. If the firm is financed with $120,000,000 of common shares (market value) and $80,000,000 of debt, then what is the after-tax weighted average cost of capital for Poly's if it is subject to a 35 percent marginal tax rate?

• A) 10.20%
• B) 11.76%
• C) 11.88%
• D) 13.32%

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Definitions:

Telecommunication Linkages

Connections established through electronic systems or networks that facilitate the transfer of data and information over distances.

Remote Location

A place situated far from the main centers of population or operation, often requiring digital connectivity for communication.

Performance Appraisal

The systematic evaluation of an employee's performance in their job role, often used for developmental or reward decisions.

Measurement Error

refers to the difference between the actual value and the measured value caused by imprecision or inaccuracies in data collection or analysis.