If the Cost of Debt Is 5%, the Cost of Equity

question 6

Multiple Choice

If the cost of debt is 5%, the cost of equity is 10%, and 70% of assets are financed by equity, the weighted average cost of capital is

• A) 5.0%
• B) 7.5%
• C) 8.5%
• D) 10.0%
• E) None of the above

---

Definitions:

Monthly

Occurring, produced, or executed once every month.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of retirement planning.

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets, intended to support retirement.

Quarterly

Occurring or done every three months.