Calculate the Company's Cost of Equity Given the Following Information

question 77

Multiple Choice

Calculate the company's cost of equity given the following information: return on assets 13.25%; return on debt 8.25%; total debt $525,000; total equity $775,000.

• A) 17.74%
• B) 16.64%
• C) 15.54%
• D) 14.44%
• E) 13.34%

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Definitions:

Computer Industry

A sector of the economy that encompasses businesses involved in manufacturing, developing, and selling computer hardware, software, and services.

Stock Value

The worth of a stock, influenced by the company's performance, market conditions, and investor sentiment.

Current Shareholders

Individuals or institutions that own shares of stock in a corporation at the present time.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed, including wages, salaries, bonuses, and benefits.