A Firm Has a Debt-To-Equity Ratio of 1

question 77

Multiple Choice

A firm has a debt-to-equity ratio of 1.0.If it had no debt,its cost of equity would be 12%.Its cost of debt is 9%.What is its cost of equity if there are no taxes?

• A)21%
• B)18%
• C)15%
• D)16%

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Definitions:

Interference

Disturbance or obstruction of processes, signals, or activities, often leading to a decrease in performance or quality.

Negative Communication

Exchange of information laden with negative emotions, misunderstandings, or conflicts.

Feedback

Information provided as a response to an action or process, used for improvement and adjustment purposes.

Communication

The process of exchanging information or expressing ideas, feelings, or instructions through various modes, such as speech, writing, or signals.