A Firm Has an Unlevered Cost of Capital of 10

question 192

Multiple Choice

A firm has an unlevered cost of capital of 10%, a cost of debt of 9%, and a tax rate of 34%. If it desires a cost of equity of 14%, what is its target debt/equity ratio?

• A) 2.49
• B) 3.89
• C) 4.68
• D) 5.14
• E) 6.06

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Definitions:

Divine Intervention

Divine Intervention refers to the belief in spiritual forces or a deity intervening in human affairs, which can be a source of strength and comfort for some individuals.

Individuation

The process of becoming aware of oneself as an individual distinct from others and the general social environment.

Collaborative Educator Relationship

A partnership model between educators and others (students, parents, community members) emphasizing shared goals and mutual respect.

Working Relationship

A professional, collaborative relationship between a client and therapist or counselor that facilitates progress in therapy.