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

---

Definitions:

Obsessive-Compulsive Personality Disorder

A personality disorder characterized by a pervasive pattern of preoccupation with orderliness, perfectionism, and control, at the expense of flexibility, openness, and efficiency.

Flaws

Imperfections, mistakes, or weaknesses that may detract from the overall value or functionality of something.

Mistakes

Mistakes are actions or decisions that are incorrect or unwise, often resulting from a lack of knowledge or judgment.

DSM-5 Criteria

The diagnostic criteria for mental disorders listed in the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, used by healthcare professionals as a guide for diagnosing mental conditions.