Use TheUse the Firm Has Only Been Listed on the Stock

question 96

Multiple Choice

Use theUse the firm has only been listed on the stock exchange for a short time,you do not have an accurate assessment of Nielson's equity beta.However,you do have the following data for another firm in the same industry: Nielson has a much lower debt-equity ratio of .5,which is expected to remain stable,and Nielson's debt is risk free.Nielson's corporate tax rate is 21%,the risk-free rate is 5%,and the expected return on the market portfolio is 10%.
-Nielson's equity cost of capital is closest to:

• A)11.3%.
• B)12.2%.
• C)14.0%.
• D)14.4%.

---

Definitions:

Reconsolidation

The process by which previously consolidated memories are recalled and then stored again, potentially altered.

Long-term Memories

Memories that can be retained for a prolonged period, even a lifetime, encompassing events, facts, and experiences.

Organic Chemistry

The scientific study of the structure, properties, and reactions of organic compounds and materials, mainly those containing carbon.

Retroactive Interference

A memory phenomenon where newer information interferes with the ability to recall older information.