The firm gets one-half of its capital from stock, and the other half from bonds. The debtholder’s required rate of return is 5%, the equity holder’s required rate of return is 10% and the firm’s tax rate is 2%. What is the weighted average cost of capital (WACC)? [Select the best answer, please.] 7.0 % 7.5 % 9.0 % 9.5 % 10.0 %
The firm gets one-half of its capital from stock, and the other half from bonds. The debtholder’s required rate of return is 5%, the equity holder’s required rate of return is 10% and the firm’s tax rate is 2%. What is the weighted average cost of capital (WACC)? [Select the best answer, please.] 7.0 % 7.5 % 9.0 % 9.5 % 10.0 %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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- The firm gets one-half of its capital from stock, and the other half from bonds. The debtholder’s required
rate of return is 5%, the equity holder’s required rate of return is 10% and the firm’s tax rate is 2%. What is the weighted average cost of capital (WACC)? [Select the best answer, please.] - 7.0 %
- 7.5 %
- 9.0 %
- 9.5 %
- 10.0 %
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