SAP C-FIORDEV-21 Q&A - in .pdf

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NEW QUESTION: 1

A. ipconfig /release then ipconfig /renew
B. ipconfig /dhcp
C. ipconfig /renew
D. ipconfig /all
Answer: A

NEW QUESTION: 2
Consider the following information:
Borrowing Rate 10%
Marginal Tax Rate 40%
Preferred Stock Par Price $100
Preferred Dividend $10
Preferred Stock floatation cost 2.5%
Cost of common equity 12.0%
Preferred Stock issued at Par
The Optimal Capital Structure is 45% debt, 50% common equity, and 5% preferred stock. Credit Rating BB
+
What is the firm's Weighted Average Cost of Capital (WACC)?
A. 9.21%
B. 2.5%
C. 8.0%
D. 7.21%
E. 28.00%
F. 9.0%
Answer: A
Explanation:
Explanation/Reference:
Explanation:
The firm's Weighted Average Cost of Capital (WACC) is a weighted average of the component cost of capital. In this case 10%(borrowing rate) x (1-.4)Tax savings = 6% is the component cost of debt. $10 (preferred dividend) / 97.5(Par minus floatation cost) = 10.25% is the component cost of preferred stock.
Thus the WACC = .45(6%) + .5(12%) + .05(10.25%) = 9.21%

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