Blue Ribbon, Inc

question 124

Multiple Choice

Blue Ribbon, Inc. wants to have a weighted average cost of capital of 10 percent. The firm has an after-tax cost of debt of 4 percent and a cost of equity of 12 percent. What debt-equity ratio is
Needed for the firm to achieve their targeted weighted average cost of capital?

• A) .25
• B) .33
• C) .50
• D) .67
• E) .75

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Definitions:

Social Laws

Norms and rules that govern behavior within a society, often formalized into legal codes and regulations.

Human Behavior

The range of behaviors exhibited by humans and which are influenced by culture, attitudes, emotions, values, ethics, authority, rapport, hypnosis, persuasion, coercion, and/or genetics.

Positivism

A system of thought that regards scientific observation to be the highest form of knowledge.

Scientific Observation

The process of carefully watching and analyzing phenomena in a systematic way to gain empirical knowledge.