Question
12. If the internal rate of return is higher than the cost of capital (discount rate) a. the present value of all the cash inflows
12. If the internal rate of return is higher than the cost of capital (discount rate)
a. the present value of all the cash inflows will be equal to zero
b. the present value of all the cash inflows will be higher than the initial outlay
c. the payback period will be very short
d. none of the above
13. You are hired as a consultant to a company, whose target capital structure is 30% debt, 18% preferred, and 52% common equity. The after-tax cost of debt is 8.00%, the cost of preferred is 9.50%, and the cost of retained earnings is 13.4%. The firm will not be issuing any new stock. What is its WACC?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started