Your fiRm Has a Pre-Tax Cost of Debt of 8

question 358

Multiple Choice

Your firm has a pre-tax cost of debt of 8% and an unlevered cost of capital of 12.5%. Your tax rate is 35% and your cost of equity is 14.34%. What is your debt-equity ratio?

• A) .48
• B) .52
• C) .57
• D) .63
• E) .67

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Definitions:

Cataplexy

A sudden and temporary loss of muscle tone triggered by strong emotions, often associated with narcolepsy.

Zeitgebers

External or environmental cues, such as light and temperature, which help regulate biological rhythms through entrainment.

Sleep Apnea

A disorder characterized by pauses in breathing or periods of shallow breathing during sleep.