A FIRM WITH A MARGINAL TAX RATE OF 40% HAS A WEIGHTED AVERAGE COST...

26. - MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING VERSIONB QUESTIONS 2014
MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING VERSIONB QUESTIONS 2014

26.

A firm with a marginal tax rate of 40% has a weighted average cost of capital of 7.11%. The before-tax cost of debt is 6%, and the cost of equity is 9%. The weight of equity in the firm's capital structure is closest to: A. 79%. B. 37%. C. 65%.