You are given the following information for Regeneron, Inc.:

Long-term Debt Outstanding: $2,650,000 Current yield to maturity(r_debt): 8% Numbers of shares of common stock: 100,000 Price per share: $35 Book value per share: $15 Expected rate of return on stock(r_equity): 24%

Question 15

0 / 6.25 points

Suppose Regeneron's marginal tax rate is 40%. Calculate Regeneron's after-tax WACC.

Question options:

	11.74%
	10.72%
	15.04%
	15.73%

View Feedback

Question 16

0 / 6.25 points

Which of the following statement is false?

Question options:

	The company cost of capital is the cost of debt of the firm.
	One calculates the weighted average cost of capital (WACC), on an after-tax basis, as: WACC = (rDebt) (1 - TC ) (D/V) + (rEquity) (E/V), where: rDebt is the required rate of return on the debt, rEquity is the required rate of return on the equity, TC is the company marginal tax rate, and V (Total Market Value) = D (Market Value of Debt) + E (Market Value of Equity).
	The company cost of capital is the correct discount rate only for investments that have the same risk as the company's overall business.
	Firms with high operating leverage tend to have higher asset betas.