CORRECT ANSWER B. ANGELA’S LONG-TERM DEBT IS 45% OF ITS CAPITAL...

138.

Correct answer b. Angela’s long-term debt is 45% of its capital structure as shown below.

Cost of debt

= .08 x (1 - .4)

= .048

WACC

.15X + .048 (1-X) = .1041

.102X

= .0561

Preferred equity

X

= .55

Debt

1 – X

= .45