The Cost of Equity for a Firm Is 12% and Its

question 36

Multiple Choice

The cost of equity for a firm is 12% and its cost of debt is 6%. Ignoring taxes, what is the firm'sWACC if its debt-to-equity ratio is 1.0?

• A) 12%
• B) 9%
• C) 18%
• D) 15%

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Definitions:

GASB

The Governmental Accounting Standards Board, which establishes accounting standards for state and local governments in the United States.

Monetary Transfers

Financial transactions that involve the movement of money from one party to another, which can be domestic or international in nature.

Fund Balance―Nonspendable

The portion of a government's fund balance that cannot be spent because it is either not in spendable form or legally or contractually required to be maintained intact.

General Fund

A primary accounting fund used by a government to record its general operating revenues and expenses.