A Firm Uses Only Debt and Equity in Its Capital

question 89

Multiple Choice

A firm uses only debt and equity in its capital structure. The firm's weight of debt is 45 percent. The firm could issue new bonds at a yield to maturity of 10 percent and the firm has a tax rate of 21 percent. If the firm's WACC is 12 percent, what is the firm's cost of equity?

• A) 15.35 percent
• B) 15.63 percent
• C) 16.09 percent
• D) 14.57 percent

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The essential qualities or attributes required for a particular task or to excel in a specific field.

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A colloquial term often used to describe the desirable qualities or characteristics in a person for a specific role or task.

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