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Author Question: Which item below is not a guideline for effective diversification? Diversify A) among ... (Read 61 times)

P68T

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on: Jul 11, 2018
Which item below is not a guideline for effective diversification? Diversify
 
  A)
 
  among tangibles and intangibles.
  B)
 
  among assets and liabilities.
  C)
 
  on a global basis.
  D)
 
  within asset groups.

Question 2

Arrow Corp. has a WACC of 8.78, a before-tax cost of debt of 6, and a tax rate of 40. If the firm is financed 30 with debt and the balance with equity, what is the cost of equity?
 
  A) 10.50
  B) 11.00
  C) 11.50
  D) 12.00


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Carliemb17

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Reply #1 on: Jul 11, 2018
Answer to Question 1

B

Answer to Question 2

B
Explanation: B) Ke = (WACC - wdKd(1-t))/We = (8.78 - .30  6  (1-.40 )/.7 = 11.0.


P68T

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  • Posts: 509
Reply 2 on: Jul 11, 2018
Excellent

mcabuhat

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  • Posts: 344
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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