If a fiRm Is Unlevered and Has a Cost of Equity

question 45

Multiple Choice

If a firm is unlevered and has a cost of equity capital 12%, what would its cost of equity be if its debt-equity ratio became 2? The expected cost of debt is 8%.

• A)14.0%
• B)14.67%
• C)16.0%
• D)20.0%
• E)None of the above.

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