The required return on the stock of Moe's Pizza is 10.5 percent and aftertax required return on the company's debt is 3.31 percent. The company's market value capital structure consists of 66 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.6 percent. The tax rate is 39 percent. What is the required return for the new project? Multiple Choice 9.66% 6.02% 8.06% 6.46% 9.22%
The required return on the stock of Moe's Pizza is 10.5 percent and aftertax required return on the company's debt is 3.31 percent. The company's market value capital structure consists of 66 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.6 percent. The tax rate is 39 percent. What is the required return for the new project? Multiple Choice 9.66% 6.02% 8.06% 6.46% 9.22%
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 required return on the stock of Moe's Pizza is 10.5 percent and aftertax required return on the company's debt is 3.31 percent. The company's market value capital structure consists of 66 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.6 percent. The tax rate is 39 percent. What is the required return for the new project?
Multiple Choice
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9.66%
-
6.02%
-
8.06%
-
6.46%
-
9.22%
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