The Five and Dime Store Has a Cost of Equity

question 49

Multiple Choice

The Five and Dime Store has a cost of equity of 15.8 percent,a pretax cost of debt of 7.7 percent,and a tax rate of 35 percent.What is the firm's weighted average cost of capital if the debt-equity ratio is 0.40?

• A)10.18 percent
• B)11.72 percent
• C)12.72 percent
• D)13.49 percent
• E)14.93 percent