What Is the Cost of Equity for a Firm If

question 74

Multiple Choice

What is the cost of equity for a firm if the corporate tax rate is 40%? The firm has a debt-to-equity ratio of 1.5. If it had no debt,its cost of equity would be 16%. Its current cost of debt is 10%.

• A) 17.4%
• B) 18.4%
• C) 19.6%
• D) 21.4%
• E) None of these.

---

Definitions:

Monetary Rewards

Financial incentives provided to employees as a form of compensation or recognition for their work.

Ethical Protocols

Guidelines designed to ensure behavior and decisions align with moral and professional standards.

Visibility

Refers to the degree to which work or actions are seen or recognized by others in an organization, often affecting career opportunities and perceptions of performance.

Ingratiation

A psychological technique aimed at making oneself more likable to others through flattery or other means of manipulation to gain favor or approval.