Debbie's Cookies Has a Return on Assets of 15

question 57

Multiple Choice

Debbie's Cookies has a return on assets of 15.3 percent and a cost of equity of 16.9 percent.What is the pretax cost of debt if the debt-equity ratio is 0.54? Ignore taxes.

• A)8.87 percent
• B)9.29 percent
• C)9.64 percent
• D)11.31 percent
• E)12.33 percent

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Definitions:

Market Revolution

was a period of major economic transformation in the United States during the early 19th century, characterized by rapid developments in transportation, commercialization, and industrialization, leading to the creation of a national market economy.

Walden

A book by Henry David Thoreau, published in 1854, that reflects on simple living in natural surroundings, based on his two-year experience near Walden Pond.

Gibbons v. Ogden

A landmark decision by the U.S. Supreme Court in 1824 that held that the power to regulate interstate commerce was granted to Congress by the Commerce Clause of the Constitution.

Steamboat Navigation

The use of steam-powered vessels to transport goods and passengers across rivers, lakes, and coastal waters, revolutionizing travel and trade in the 19th century.