Glover Tools Has a Pre-Tax Cost of Debt of 9

question 170

Multiple Choice

Glover Tools has a pre-tax cost of debt of 9% and an unlevered cost of capital of 13.5%. The firm's tax rate is 34% and the cost of equity is 15%. What is the firm's debt-equity ratio?

• A) .42
• B) .48
• C) .51
• D) .58
• E) .64

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Definitions:

Materials Requisition

The process of requesting and withdrawing materials from inventory for use in the production process or for other operational needs.

Source Document

An original record, such as an invoice or receipt, that evidences a business transaction.

Indirect Materials

Indirect materials are those materials used in the production process but are not directly traceable to specific products, such as lubricants for machinery.

Work in Process Inventory

Goods that are in the production process but have not yet been completed; represents one of the stages in manufacturing inventory.