Higher risk than all previous projects under-taken by firm

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Reference no: EM131576517

1. One way to adjust for new projects that have a higher risk than all previous projects under-taken by the firm is to:

a. use more debt financing

b. use more preferred stock financing

c. use less debt financing

d. add a risk premum to the wacc

e. subtract a risk premium from the wacc

2. Walken Industries bonds sell for $890 and have a par value of $1,000. The coupon rate is 6% and the bonds have a maturity of 20 years. If the company is in a 35% marginal tax bracked what is its after tax component cost of debt?

a. 6.31%

b. 4.58%

c. 7.04%

d. 9.98%

e. 8.91%

Reference no: EM131576517

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