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.

---

Definitions:

Genetically Modified

Referring to organisms whose genetic material has been altered through genetic engineering techniques, typically to introduce desirable traits or enhance certain characteristics.

Absolute Certainty

The state of being completely confident or sure about something, with no room for doubt.

Scientific Investigator

A person engaged in systematic inquiry or research to discover new information or understanding in the field of science.