Author Question: A company's capital structure is made up of 40 debt and 60 common equity (both at market values). ... (Read 51 times)

TFauchery · **on:** Jul 1, 2018

A company's capital structure is made up of 40 debt and 60 common equity (both at market values). The interest rate on bonds similar to those issued by the company is 8. The cost of equity is estimated to be 15. The income tax rate is 40.

The company's weighted cost of capital is A) 11.5.
B) 12.2.
C) 10.9.
D) 8.9.

Question 2

Compared to free trade, a ban on imports of a good

A) increases the domestic price of the good.
B) decreases consumer surplus.
C) results in a deadweight loss.
D) All of the above.