Suppose a firm's stock valuation is worth three times its outstanding debt. The firm's stock earns an annual return of 6 percent and pays 8 percent on the outstanding debt. What is the firm's company cost of capital?
A) 4.5 percent
B) 6 percent
C) 6.5 percent
D) 8 percent
C
You might also like to view...
Use the aggregate expenditures model and the following values to answer the next question.AMPCIGT$9000.9$2,500$2,500$1,000Determine equilibrium real GDP for this economy.
A. $69,000 B. $59,000 C. $50,000 D. $60,000
Fill in the blank: Your textbook authors wrote, "A law that restricts competitors ________ competition."
A) preserves B) restricts C) promotes D) repairs
Assume the price of good X is Px, price of good Y is Py, and B is the budget. The formula for the budget line for these two goods is:
a. PyQy / PxOx. b. PxB + PyB = B. c. PxX + PyY = B. d. (1 ? Py / B) Px.
A game in economics is defined as
A) something that is shown on ESPN. B) competition in which strategic decision making is integral. C) competition in general. D) an actual strategy chosen by one or more economic agents.