Paraglide Corp. has a target debt-equity ratio of .48. Its cost of equity is 16.4 percent, and its pretax cost of debt is 8.2 percent. If the tax rate is 34 percent, what is the company's WACC? O 11.28 percent O 11.72 percent 13.20 percent 12.84 percent 12.91 percent

Paraglide Corp. has a target debt-equity ratio of .48. Its cost of equity is 16.4 percent, and its pretax cost of debt is 8.2 percent. If the tax rate is 34 percent, what is the company's WACC? O 11.28 percent O 11.72 percent 13.20 percent 12.84 percent 12.91 percent

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Paraglide Corp. has a target debt-equity ratio of .48. Its cost of equity is 16.4 percent, and its pretax
cost of debt is 8.2 percent. If the tax rate is 34 percent, what is the company's WACC?
11.28 percent
11.72 percent
13.20 percent
12.84 percent
12.91 percent

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