You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 12.00%. The firm will not be issuing any new stock. What is its WACC?
A. 8.93%
B. 7.59%
C. 6.96%
D. 7.68%
E. 6.69%
Answer: A
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An organization will typically utilize a subsidiary ledger to
A) make sure all debits equal credits. B) make it easier to handle cash received from customers. C) keep customer accounts up to date. D) record customer credit sales outside of the normal double entry system.
When a business has departmental operations, departmental reports are a part of the basic financial statements
Indicate whether the statement is true or false
________ is a noncash charge
A) Labor expense B) Depreciation C) Salaries D) Rent
During 2018 and 2019, Danny pays property taxes of $3,500 each year on a piece of land. During 2018, the land is vacant and unproductive. In 2019, Danny uses the land as a parking lot and generates $16,000 in income. Which of the following is true regarding the property taxes?
A. Capitalize $3,500 each year. B. Capitalize $3,500 in 2018 and deduct $3,500 in 2019. C. Deduct $3,500 each year. D. Either B or C is acceptable.