A Firm Has a Debt-To-Equity Ratio of 1

question 45

Multiple Choice

A firm has a debt-to-equity ratio of 1.20. If it had no debt, its cost of equity would be 15%. Its cost of debt is 10%. What is its cost of equity if there are no taxes or other imperfections?

• A) 21%.
• B) 18%.
• C) 15%.
• D) 10%.

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Definitions:

Peaceful Methods

Techniques or approaches used to resolve conflicts or achieve goals without violence.

International Relations

The study and practice of political, economic, and cultural relationships between nations.

Iranian Relations

The diplomatic, economic, and military interactions between the governments of Iran and other countries.

Nuclear Capability

The ability of a country or entity to develop, test, and use nuclear weapons.