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Review The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in thousands) is as follows. The debt has just been refinanced at
Review The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in thousands) is as follows. The debt has just been refinanced at an interest rate of 6% (short term) and 8% (long term). Assume that the book and market values of company's debt are the same. The expected rate of return on the company's shares is 15%. There are 7.46 million shares outstanding, and the shares are trading at 46. The tax rate is 25%. Calculate this company's weighed-average cost of capital. Cash and marketable securities Accounts receivable 1.500 120,000 Short-term debt Accounts payable Inventory Current assets Property, plant, and equipment Deferred taxes Other assets Total 125,000 Current liabilities 75,600 62.000 137,600 246.500 212,000 Long-term debt 208.600 45.000 89.000 Shareholders' equity 246,300 592.500 Total 592,500 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 8.52% b 10.74% C 11.02%
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