Question
The following data pertains to Radek Corp., a manufacturer of office supplies (dollar amounts in thousands). Use this information to complete Questions 2 - 6.
The following data pertains to Radek Corp., a manufacturer of office supplies (dollar amounts in
thousands). Use this information to complete Questions 2 - 6.
Total assets $8,731
Interest-bearing debt $4,239
Average borrowing rate for debt 10.0%
Common equity:
Book value $3,130
Market value $16,284
Marginal income tax rate 35%
Market equity beta 1.33
5. Determine the weight on equity capital that should be used to calculate Radek's weighted-average
cost of capital.
a. 73.97%
b. 79.35%
c. 42.48%
d. 47.46%
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College Accounting A Practical Approach
Authors: Jeffrey Slater, Debra Good
13th Canadian edition
134616316, 134166698, 9780134632407 , 978-0134166698
