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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%?

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Definitions:

Coworkers

Individuals who work together in the same organization or workplace, often sharing tasks and responsibilities.

Honest

The quality of being truthful, sincere, and free from deceit or fraud.

Self-monitoring

The practice of paying attention to one's own behavior and its effects on others, with the potential to adjust behavior based on social cues.

Judged

Considered or deemed to be in a certain way, often involving forming an opinion or evaluation.

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