Question 20 (1 point)

What is the free cash flow for a firm with a $500,000 earnings before tax (EBT), $100,000 depreciation expense only, and a 48% marginal tax rate? (Exam 2)

Question 20 options:

	$425,000
	$325,000
	$360,000
	$260,000

Question 13 (1 point)

Here is the capital structure shown in Executive Fruits book balance sheet. Suppose Executive Fruits corporate income tax rate is 25%, r(E) is 12%, and r(D) is 8%. Its weighted average cost of capital WACC is ___.

Item	Book value	Percentage
Debt	$ 4.5 million	45%
Common stock	$ 5.5 million	55%
Total	$10.0 million	100%

Question 13 options:

	8.70%
	9.80%
	11.50%
	None of the above

Question 8 (1 point)

What is the after-tax cost of debt for a firm if it has a 35% tax rate and a 10% pre-tax cost of debt?

Question 8 options:

	5.85%
	6.50%
	15.38%
	6.15%