Rosita's Has a Cost of Equity of 13

question 56

Multiple Choice

Rosita's has a cost of equity of 13.8% and a pre-tax cost of debt of 8.5%. The debt-equity ratio is .60 and the tax rate is .34. What is Rosita's unlevered cost of capital?

• A) 8.83%
• B) 12.30%
• C) 13.97%
• D) 14.08%
• E) 14.60%

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Definitions:

Humans

A species of bipedal primates belonging to the genus Homo, particularly Homo sapiens, characterized by advanced cognitive abilities.

Explosive Radiation

Rapid evolutionary diversification within a lineage, resulting in the formation of many new species.

Birds

Warm-blooded, feathered vertebrates that lay eggs, characterized by their ability to fly, although some species are flightless.

Adaptations

The process by which organisms adjust to changes in their environment, often leading to evolutionary changes that improve survival and reproduction.