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Question
Wayco Industrial Supply has a pretax cost of debt of 8.3 percent, a cost of equity of 14.7 percent, and a cost of preferred stock of 8.9 percent. The firm has 165,000 shares of common stock outstanding at a market price of $33 a share. There are 15,000 shares of preferred stock outstanding at a market price of $43 a share. The bond issue has a face value of $750,000 and a market quote of 101. The company's tax rate is 21 percent. What is the weighted average cost of capital?
A) 12.18 percent
B) 10.84 percent
C) 14.32 percent
D) 12.60 percent
E) 13.25 percent
Answer
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Related questions
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Q:
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Q:
Which one of the following statements is correct concerning the NYSE?
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Q:
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Q:
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B) general partnerships.
C) limited partnerships.
D) corporations.
E) limited liability companies.
Q:
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A) managers
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E) Securities and Exchange Commission agent
Q:
Decisions made by financial managers should primarily focus on increasing the:
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B) growth rate of the firm.
C) gross profit per unit produced.
D) market value per share of outstanding stock.
E) total sales.
Q:
A partnership with four general partners:
A) distributes profits based on percentage of ownership.
B) has an unlimited partnership life.
C) limits the active involvement in the firm to a single partner.
D) limits each partner's personal liability to 25 percent of the partnership's total debt.
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Q:
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A) the receipt of tax-free income.
B) the partner's active participation in the firm's activities.
C) the lack of any potential financial loss.
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Q:
Which one of the following statements concerning a sole proprietorship is correct?
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B) The profits of a sole proprietorship are subject to double taxation.
C) The owner of a sole proprietorship is personally responsible for all of the company's debts.
D) There are very few sole proprietorships remaining in the U.S. today.
E) A sole proprietorship is structured the same as a limited liability company.
Q:
Which one of the following questions is least likely to be addressed by financial managers?
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B) Should customers be given 30 or 45 days to pay for their credit purchases?
C) Should the firm borrow more money?
D) Should the firm acquire new equipment?
E) How much cash should the firm keep on hand?
Q:
An example of a capital budgeting decision is deciding:
A) how many shares of stock to issue.
B) whether or not to purchase a new machine for the production line.
C) how to refinance a debt issue that is maturing.
D) how much inventory to keep on hand.
E) how much money should be kept in the checking account.
Q:
The date on which a shareholder is officially listed as the recipient of stock rights is called the:
A) issue date.
B) offer date.
C) declaration date.
D) holder-of-record date.
E) ex-rights date.