A Firm Uses Only Debt and Equity in Its Capital

question 99

Multiple Choice

A firm uses only debt and equity in its capital structure. The firm's weight of debt is 75 percent. The firm could issue new bonds at a yield to maturity of 12 percent and the firm has a tax rate of 30 percent. If the firm's WACC is 13 percent, what is the firm's cost of equity?

• A)38.29 percent
• B)36.00 percent
• C)26.80 percent
• D)4.00 percent

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Definitions:

False Imprisonment

The unlawful restraint of a person's freedom of movement without legal authority or justification.

Intentional Confinement

Deliberately restraining or restricting someone's freedom of movement without legal authority or justification.

Assault

An act that creates a fear in another person of imminent physical harm or an attempt or threat to physically harm another person.

Appropriation

The unauthorized use of someone else's copyrighted or personal property or image, often without consent, especially in contexts of art and culture.