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:

Political Thought

The body of ideas, theories, and philosophies regarding governance, political processes, and the structures of power and authority.

Government's Role

Government's role refers to the responsibilities and powers a government has to create laws, provide services, and ensure the welfare of its citizens.

Democracy

A system of rule where the power lies with the citizens, either directly or through their elected delegates.

Property

Legal rights or interests that allow the ownership, use, and control of assets like land, buildings, or personal items.