Your Firm Has a Pre-Tax Cost of Debt of 7

question 6

Multiple Choice

Your firm has a pre-tax cost of debt of 7% and an unlevered cost of capital of 13%. Your tax rate is 35% and your cost of equity is 15.26%. What is your debt-equity ratio?

• A) .43
• B) .49
• C) .51
• D) .54
• E) .58

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Definitions:

Observational Effect

The impact that observation can have on the behavior of subjects being studied, often related to the phenomenon of subjects altering their behavior because they are aware they are being observed.

Valid

Relates to something that is logically sound, well-founded, or produces desired results; often used in the context of arguments or research findings.

Indicator

Something that points to or reflects an abstract concept.

Sociological Knowledge

The body of information and understanding about society's structures, functions, and dynamics acquired through sociological research and theory.