1. ABC company has a market debt-equity ratio of 1.30 and a corporate tax rate of 38%, and it pays 9% interest on its debt. By what amount does the interest tax shield from its debt lower ABC's WACC?

JAZZ Inc. has market capitalization of $60 billion. The firm is expected to pay a dividend of $0.30 per share. The market price of each share is $40. The growth rate in dividends is expected to be 7% per year. Also, the firm has $20 billion of debt that trades with a yield to maturity of 8%. If the firm's tax rate is 35%, compute the WACC?

Select one:

6.40%

6.05%

7.11%

6.76%