Phil's Carvings,Inc

question 22

Multiple Choice

Phil's Carvings,Inc. wants to have a weighted average cost of capital of 9%. The firm has an after-tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?

• A) .33
• B) .40
• C) .50
• D) .60
• E) .67

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Definitions:

Operant Psychologists

Psychologists who study behavior as it is influenced by its consequences, emphasizing the use of reinforcement and punishment.

Bar Pressing

A behavior in laboratory animals, like rats, trained to press a bar or lever to obtain food or water, used in research on learning and conditioning.

Conditioning Situation

A scenario or environment in which classical or operant conditioning occurs, thereby influencing learning or behavior.

Instinctive Drift

The tendency of an animal's learned behavior to revert to its instinctual behaviors over time, interfering with conditioned responses.