9. The Patrick Company's cost of common equity (rs) is 16%, its before-tax cost of debt (ra) is 8%, and its marginal tax rate is 20%. The stock sells at $41 per share and bonds sell at $900 per bond. Assets Cash Account Receivable Inventories $100,000 $300,000 $400,000 Plant and equipment, net $4,200,000 Total assets $5,000,000 Liabilities and Equity Long-term debt (par value=$1000) Common stock (par value=$1) Retained earnings Total liabilities and equity What is Patrick's WACC if it raises capital based on market value capital structure? a. 12.16% b. 14.56% c. 14.27% d. 12.80% e. 13.88% $2,000,000 $200,000 $2,800,000 $5,000,000 the cost of cap
9. The Patrick Company's cost of common equity (rs) is 16%, its before-tax cost of debt (ra) is 8%, and its marginal tax rate is 20%. The stock sells at $41 per share and bonds sell at $900 per bond. Assets Cash Account Receivable Inventories $100,000 $300,000 $400,000 Plant and equipment, net $4,200,000 Total assets $5,000,000 Liabilities and Equity Long-term debt (par value=$1000) Common stock (par value=$1) Retained earnings Total liabilities and equity What is Patrick's WACC if it raises capital based on market value capital structure? a. 12.16% b. 14.56% c. 14.27% d. 12.80% e. 13.88% $2,000,000 $200,000 $2,800,000 $5,000,000 the cost of cap
Chapter12: Capital Structure
Section: Chapter Questions
Problem 2PROB
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