Using the WACC in Practice: Ronnie's Comics Has Found That

question 42

Multiple Choice

Using the WACC in practice: Ronnie's Comics has found that its cost of common equity capital is 15 percent and its cost of debt capital is 12 percent. If the firm is financed with $250,000,000 of common shares (market value) and $750,000,000 of debt, then 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%

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Goods and Services

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Defensive Strategy

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Corporate Social Responsibility

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