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Evaluate what is the firm weighted average cost of capital

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Question 1: Image Company Ltd, currently has the following capital structure based on market values and the respective returns required by investors. Assume that the firm's marginal tax rate is 40%, what is the firm's weighted average cost of capital (WACC)?

Capital Component           Weighting             Return required by investors

Debt                                      40%                           8%

Preference shares                      10%                         10%

Ordinary shares                          50%                        15%

Select one:

Option a. 10.42%

Option b. 6.25%

Option c. 15.63%

Option d. 8.34%

Reference no: EM132578817

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