Question
Java Corporation has the following capital structure and pays an income tax rate of 40%. Security Book Value Market Value Required Rate of Return Debt
Java Corporation has the following capital structure and pays an income tax rate of 40%.
|
Security |
Book Value |
Market Value | Required Rate of Return |
| Debt | $49 million | $52 million | 7.00% |
| Preferred Stock | $9 million | $10 million | 8.00% |
| Common Stock | $35 million | $80 million | 16.00% |
What is Java's weighted average cost of capital?
| A. | 9.01% |
| B. | 10.33% |
| C. | 10.48% |
| D. | 11.12% |
| E. | 12.14% |
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Multinational Finance
Authors: Kirt C. Butler
4th Edition
1405181184, 978-1405181181
