Down Bedding Has an Unlevered Cost of Capital of 14

question 73

Multiple Choice

Down Bedding has an unlevered cost of capital of 14 percent,a cost of debt of 7.8 percent,and a tax rate of 32 percent.What is the target debt-equity ratio if the targeted cost of equity is 15.51 percent?

• A).24
• B).29
• C).36
• D).52
• E).71

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Definitions:

Supply

Supply is the total amount of a good or service available for purchase at any given price level in a given market.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Demand

How much of a service or product buyers intend and are financially able to acquire at various price intervals during a designated period.

Supply

The total amount of a specific good or service that is available to consumers in the market.