Malitz Inc

question 13

Multiple Choice

Malitz Inc.recently hired you as a consultant to estimate the company's WACC.You have obtained the following information.- Malitz's noncallable bonds mature in 25 years,have an 8.00% annual coupon,a par value of $1,000,and a market price of $1,075.00.- The company's tax rate is 40%.- The risk-free rate is 4.50%,the market risk premium is 5.50%,and the stock's beta is 1.20.- The target capital structure consists of 35% debt and the balance as common equity.Malitz uses the CAPM to estimate the cost of equity,and it does not expect to issue any new common stock.What is its WACC?

• A)7.51%
• B)7.90%
• C)8.32%
• D)8.76%

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Definitions:

Dopamine Levels

The concentration of dopamine, a neurotransmitter associated with the brain's reward and pleasure centers, motor function, and regulation of mood.

Axon

The neuron extension that passes messages through its branches to other neurons or to muscles or glands.

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.

Neurotransmitter

Chemical substances that transmit signals across a synapse from one neuron to another in the nervous system.