A Firm Has a Debt-Equity Ratio of 1

question 26

Multiple Choice

A firm has a debt-equity ratio of 1.Its cost of equity is 17.4 percent and its pretax cost of debt is 7.2 percent.Assume there are no taxes or other imperfections.What would be its cost of equity if the debt-equity ratio were zero?

• A)8)8%
• B)10.9%
• C)12.3%
• D)13.1%
• E)11.6%

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Definitions:

Sexual Orientation

An enduring pattern of emotional, romantic, or sexual attractions to men, women, or both sexes, as well as the absence of such attractions.

Feminism

Belief in the social, political, and economic equality of the sexes; also the social movements organized around that belief.

Equality of the Sexes

The belief or principle that men and women should receive equal treatment and not be discriminated against based on gender.

Gender Binary

A system of classification with only two distinct and opposite gender categories.