Dye Industries Currently Uses No Debt, but Its New CFO

question 10

Multiple Choice

Dye Industries currently uses no debt, but its new CFO is considering changing the capital structure to 40.0% debt (wd) Risk-free rate, rRF 6.00% Tax rate, T 40% Market risk premium, RPM 4.00% Current wd 0% Current beta, bU 1.15 Target wd 40%

• A) 1.66%
• B) 1.84%
• C) 2.02%
• D) 2.23%
• E) 2.45%

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Definitions:

Competitiveness of Markets

The degree of competition within a market, influencing pricing, product quality, and innovation.

Internet

A vast network of computers connected globally, allowing them to communicate and share information across long distances instantly.

Natural Monopoly

A market condition where a single firm can supply a product or service at a lower cost than any potential competitor, often due to economies of scale.