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4. The weighted average cost of capital (WACC) for a hotel business: A. is the return investors require on the total assets of the firm.

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4. The weighted average cost of capital (WACC) for a hotel business: A. is the return investors require on the total assets of the firm. B. is unaffected by changes in corporate tax rates. C. should be used as the required return when analyzing a potential acquisition of a restaurant. D. is equivalent to the aftertax cost of the firm's liabilities. 15. The weighted average cost of capital for a firm may be dependent upon the firm's: 1. dividend growth II. debt-equity ratio III. tax rate IV. unsystematic risk of the firm A. I and III only B. II and IV only C. I, II, and III only D. I, II, III, and IV 6. Chelsea Fashions is expected to pay an annual dividend of $0.80 a share next year. The market price of the stock is $22.40 and the growth rate is 5 percent. What is the firm's cost of equity? A. 7.58 percent B. 7.91 percent C. 8.24 percent D. 8.57 percent E. None of the above

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