A Firm Has a Debt-To-Equity Ratio of 1

question 78

Multiple Choice

A firm has a debt-to-equity ratio of 1.75. If it had no debt,its cost of equity would be 14%. Its cost of debt is 10%. What is its cost of equity if the corporate tax rate is 50%?

• A) 14.0%
• B) 16.0%
• C) 17.5%
• D) 21.0%
• E) None of these.

---

Definitions:

Copies

Reproductions or duplicates of an original document, artwork, or item.

Next of Kin

The closest living relative or relatives to someone, particularly important in legal contexts such as inheritance or emergency decisions.

Intestate

Having died without leaving a valid will. Compare testate.

Uniform Simultaneous Death Act

A legal guideline used to determine the distribution of property when two or more individuals die at the same time with no clear evidence of who died first.