Triangle Enterprises Has No Debt but Can Borrow at 9

question 54

Multiple Choice

Triangle Enterprises has no debt but can borrow at 9 percent.The firm's WACC is currently 14.7 percent,and there is no corporate tax.If the firm converts to 70 percent debt,what will its cost of equity be?

• A)20.67 percent
• B)22.95 percent
• C)24.47 percent
• D)26.39 percent
• E)28.00 percent

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Definitions:

Property Income

A type of income generated from owning real estate or tangible property that can produce revenue through renting, leasing, or price appreciation.

Rich Receive

The concept that wealthier individuals or entities receive a disproportionate amount of financial gains or benefits in an economic system.

Welfare

Government programs designed to assist individuals and families in meeting basic needs, such as food, housing, and healthcare.

Carrot-And-Stick

The carrot-and-stick approach is a motivational technique that combines the promise of reward (carrot) and the threat of punishment (stick) to influence behavior.