What Is the Cost of Equity for a Firm Where

question 341

Multiple Choice

What is the cost of equity for a firm where the required return on assets is 14%, the cost of debt is 11%, and the target debt/equity ratio is 0.5? Ignore taxes.

• A) 11.0%
• B) 12.5%
• C) 14.0%
• D) 15.5%
• E) 16.0%

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