Multiple Choice
Assume Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 30% weight in equity, 15% in preferred stock, and 55% in debt. The cost of equity capital is 16%, the cost of preferred stock is 11%, and the pretax cost of debt is 8%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?
A) 9.09%
B) 9.54%
C) 10.00%
D) 10.45%
Correct Answer:
Verified
Correct Answer:
Verified
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