James Bay Water Park Operates in a World with Zero

question 21

Multiple Choice

James Bay Water Park operates in a world with zero taxes and no financial distress.The firm has a debt/equity ratio of 1.The cost of equity is 12% and the cost of debt is 5%.The only difference between Whispering Pines Resort and James Bay Water Park is that Whispering Pines Resort has a debt/equity ratio of 0.What is the cost of equity for Whispering Pines Resort?

• A)5.0%
• B)8.5%
• C)12.0%
• D)17.0%

---

Definitions:

Gangster

A member of a criminal organization involved in illegal activities, often depicted in media as being associated with organized crime groups.

Immigrant

An individual who moves from one country to another with the intention of settling in the new country.

Prestige Pictures

Films produced with a higher budget and artistic aspirations, often aimed at winning critical acclaim and awards.

MGM

Metro-Goldwyn-Mayer, a legendary film studio known for its extensive library of movies, classic Hollywood films, and the iconic roaring lion logo.