A Firm Uses Only Debt and Equity in Its Capital

question 121

Multiple Choice

A firm uses only debt and equity in its capital structure. The firm's weight of debt is 40 percent. The firm could issue new bonds at a yield to maturity of 9 percent and the firm has a tax rate of 21 percent. If the firm's WACC is 11 percent, what is the firm's cost of equity?

• A) 15.92 percent
• B) 13.59 percent
• C) 15.03 percent
• D) 15.68 percent

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Definitions:

Hydration Prescription

A specific recommendation or order regarding the intake of fluids to maintain or restore proper hydration levels in the body.

Lactated Ringer's

A solution often used for fluid and electrolyte replenishment in patients, similar in composition to the body's own fluid content.

Blood Group

A classification of blood based on the presence or absence of inherited antigenic substances on the surface of red blood cells, such as the ABO and Rh factor.

Donor Groups

Collections of individuals or entities that give or contribute resources such as money, blood, organs, etc., to support causes, organizations, or individuals in need.