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

question 12

Multiple Choice

A firm has a debt-to-equity ratio of 1.20. If it had no debt,its cost of equity would be 15%. Its cost of debt is 10%. What is its cost of equity if there are no taxes or other imperfections?

• A) 10%
• B) 15%
• C) 18%
• D) 21%
• E) None of these.

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Definitions:

Team Interdependencies

The extent to which team members rely on each other to complete tasks and achieve common goals.

Newcomer Empowerment

The process of giving new members of an organization or community the authority or power to make decisions and contribute effectively.

Transformational Leadership

A style of leadership where the leader works with teams to identify needed change, creating a vision to guide the change through inspiration, and executing the change in tandem with committed members of the group.

Diverse Emotions

Refers to the variety of feelings and emotional states that individuals can experience in different contexts, contributing to the complexity of human behavior and interactions.