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:

Discrepancy

A difference or inconsistency between two or more facts, figures, or findings.

Understanding

The ability to comprehend or grasp the nature, significance, or explanation of something.

2-Year-Old Son

A reference to a male child who has reached the age of two, a period significant for developmental milestones.

Nurse's Response

The actions or interventions taken by nursing professionals in reaction to patient needs, conditions, or concerns.