AFP
CTP · Question #829
(Topic 9) What is the Weighted Average Cost of Capital for XYZ Company, assuming the following: The pre-tax cost of long term debt is 8% The cost of equity is 11% The marginal tax rate is 33% Total…
The correct answer is C. 8.7%. See the full explanation below for the reasoning.
Question
- (Topic 9)
What is the Weighted Average Cost of Capital for XYZ Company, assuming the following:
The pre-tax cost of long term debt is 8% The cost of equity is 11% The marginal tax rate is 33% Total liabilities = $75,000 Long term debt = $50,000 Owners equity = $75,000
Options
- A7.2%
- B7.8%
- C8.7%
- D12.4%
How the community answered
(33 responses)- A3% (1)
- B15% (5)
- C76% (25)
- D6% (2)
Community Discussion
No community discussion yet for this question.