A Firm Has an Expected Return on Equity of 14

question 79

Multiple Choice

A firm has an expected return on equity of 14% and an after-tax cost of debt of 6%.What debt-equity ratio should be used in order to keep the WACC at 10%?

• A)1.00
• B)0.75
• C)0.50
• D)0.25

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Definitions:

Meibomian Glands

Oil-secreting glands located in the eyelids that help to lubricate the eyes.

Sebum

An oily secretion of the sebaceous glands that helps lubricate and protect the skin and hair.

Tears

A clear liquid secreted by the lacrimal glands of the eye to lubricate the eyes and protect them from foreign particles.

Vitreous Humor

A clear gel that fills the space between the lens and the retina of the eyeball.