A Firm Has an Expected Return on Equity of 15

question 64

Multiple Choice

A firm has an expected return on equity of 15% and an after-tax cost of debt of 6%.What debt-equity ratio produces a WACC of 12%?

• A) 0.50
• B) 0.75
• C) 0.67
• D) 0.33

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Definitions:

Mining Community

A settlement built around a mine or mining operation, often developed to house workers and provide services.

Arid West

A region in the United States characterized by a dry climate, receiving insufficient rainfall to support most types of agriculture without irrigation.

Nineteenth Century

The period from January 1, 1801, to December 31, 1900, marked by significant industrial, cultural, and political changes worldwide.

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The 26th President of the United States (1901-1909) known for his progressive policies and strong leadership in conservation and foreign affairs.