A Firm Has an Expected Return on Equity of 15

question 72

Multiple Choice

A firm has an expected return on equity of 15% and an after-tax cost of debt of 10%.What debt-equity ratio should be used in order to keep the WACC at 11%?

• A)1.00
• B)2.00
• C)3.00
• D)4.00

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Definitions:

Situational Causes

Factors in the environment that influence behavior, contrasted with dispositional factors which are traits or characteristics within the person.

Prejudice

Negative attitude held by a person about the members of a particular social group.

Discrimination

Treating people differently because of prejudice toward the social group to which they belong.

Nonconformity

Nonconformity refers to the refusal to align with the established or expected norms, rules, or laws of a group or society.