Assume Time Warner shares have a market capitalization of $40 billion. The company is expected to pay a dividend of $0.25 per share and each share trades for $40. The growth rate in dividends is expected to be 7% per year
Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 9%. If the firm's tax rate is 40%, what is the WACC?
A) 5.85%
B) 6.54%
C) 6.88%
D) 7.57%
Answer: C
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A fixed asset with a cost of $41,000 and accumulated depreciation of $36,000 is traded for a similar asset priced at$50,000 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,000, atwhat cost will the new equipment be recorded in the books?
a. $50,000 b. $45,000 c. $51,000 d. $54,000
Utilitarian notions underlie cost-benefit analysis
a. True b. False Indicate whether the statement is true or false
Exponential utility has an adjustable parameter called risk tolerance. The risk tolerance parameter measures:
a. how much money the decision maker has to spend b. the decision maker's attitude toward risk c. how much risk there is in a given decision d. the probability of an unfavorable outcome e. none of these choices
The primary purpose of editing a document is to
A. develop an understanding of the audience for the document B. make sure the message is accurate and conveys what the writer intended C. determine the response the writer desires from the reader D. determine the purpose of the message