The market risk premium is 8 percent. · The beta on Fiscal Cliff's common stock is 2.3. · The company's retained earnings are sufficient so that they do not have to issue any new common stock to fund capital projects. · The company's tax rate is 40 percent. Given this information, what is Fiscal Cliff's WACC? A. 9.21% B. 12.58% C. 8.17% D. 7.63% E. 11.35%

A. 9.21%

Explanation:

WACC = Cost of Equity x Weight of Equity + Cost of Debt x Weight of Debt

Cost of Equity calculation :

Cost of Equity = Interest from risk free security + beta x market premium

                        = 3.00 % + 2.3 x 8.00%

                        = 21.40 %

Cost of Debt calculation :

PV = - $700

FV = $1,000

N = 25

PMT = $1,000 x 8% = $80

P/YR = 1

I/YR = ???

The Bond`s yield will be the cost of debt. The cost of debt using a financial calculator i/yr is 11.76 %

But,

We always use the After tax cost of debt,

After tax cost of debt = interest x (1 - tax rate)

                                    = 11.76 % x (1 - 0.40)

                                    = 7.056 %

therefore,

WACC = 21.40 % x 15 % + 7.056 % x 85 %

            = 9.2076 or 9.21 %

metallurgy is your answer

the "study of metals and the process of refining ("

note that it says metal. metallurgy has the word "metal" in it, and so is most likely your answer (and is your answer).

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answer; read and consider the content of the items;