James Bay Water Park Operates in a World with Zero

question 12

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 15% and the cost of debt is 8%.The only difference between Whispering Pines Resort and James Bay Water Park is that Whispering Pines Resort has a debt/equity ratio of 2.What is the cost of equity for Whispering Pines Resort?

• A)11.5%
• B)13.25%
• C)15.0%
• D)18.5%

---

Definitions:

Informal

Characterized by a casual or relaxed style, not bound by formal rules, conventions, or etiquette.

Long Words

Words that are characteristically long, often perceived as more complex and can be challenging to understand or pronounce.

Phrases

Groups of words that work together to convey particular meanings but do not contain both a subject and a verb to form a complete sentence.

Concise

Expressing much in few words; clear and succinct.