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

question 4

Multiple Choice

A firm has a debt-to-equity ratio of 1.75.If it had no debt, its cost of equity would be 14%.Its cost of debt is 10%.What is its cost of equity if the corporate tax rate is 30%?

• A)14.0%
• B)16.0%
• C)18.9%
• D)21.0%
• E)None of the above.

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Definitions:

Organizational Structure

Organizational structure outlines how activities such as task allocation, coordination, and supervision are directed toward the achievement of organizational aims, defining how job roles and responsibilities are distributed.

Integrator Roles

Positions or responsibilities in an organization that involve coordinating and synthesizing information across different departments to ensure aligned and efficient operations.

Direct Supervision

A management approach where managers closely oversee and control the work of their subordinates, often involving immediate feedback and instructions.

Informal Communication

The unofficial and casual exchange of information between individuals in an organization, outside formal channels.