Question: Please explain why C is the answer 18. Assume ArcheGo has 2 million shares outstanding at a price of $15, and a debt with a

Please explain why C is the answer 18. Assume ArcheGo has 2

Please explain why C is the answer

18. Assume ArcheGo has 2 million shares outstanding at a price of $15, and a debt with a book value of $10 million, trading at 120% of par value, and a yield to maturity of 7%. Given the marginal tax rate is 40% and the cost of equity is 14%, how would its WACC change if its stock price doubled? a) Decrease by 10.45% b) Decrease by 4.46% c) Increase by 10.45% d) Increase by 4.46%

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