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:

Breastfeeding

The process of feeding a baby with milk directly from the mother's breast, recommended for its nutritional and health benefits.

Combined Oral Contraceptive (COC)

A birth control pill that contains both estrogen and progestin to prevent ovulation and pregnancy.

Contraindications

Specific conditions or factors that make the use of a medical treatment or procedure inadvisable because it may be harmful.

Breastfeeding

The process of feeding a baby with milk directly from a woman's breasts, providing optimal nutrition and health benefits.