The Woodworker Has a Pretax Cost of Debt of 6

question 77

Multiple Choice

The Woodworker has a pretax cost of debt of 6.25 percent and a return on assets of 15.5 percent.The debt-equity ratio is .41.Ignore taxes.What is the cost of equity?

• A)18.46 percent
• B)18.78 percent
• C)19.43 percent
• D)18.94 percent
• E)19.29 percent

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Definitions:

Nonexcludable

A characteristic of a good or service that makes it impossible to prevent individuals who have not paid for it from having access to it.

Nonpaying Customers

Individuals or entities that receive goods or services without providing payment to the provider, often leading to revenue loss.

Nonrival-in-Consumption

A characteristic of a good or service where its consumption by one individual does not reduce its availability for consumption by others.

Common Good

A societal benefit that is shared and beneficial for all (or most) members of a community, such as clean air, public parks, and national defense.