ABC CoAnd XYZ Co

question 69

Multiple Choice

ABC Co.and XYZ Co.are identical firms in all respects except for their capital structure.ABC is all equity financed with $480,000 in stock.XYZ uses both stock and perpetual debt; its stock is worth $240,000 and the interest rate on its debt is 9 percent.Both firms expect EBIT to be $58,400.Ignore taxes.The cost of equity for ABC is _____ percent,and for XYZ it is ______ percent.

• A)12.17; 12.68
• B)12.17; 13.33
• C)12.17; 15.33
• D)12.29; 12.68
• E)12.29; 13.33

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Definitions:

Voter Turnout

The percentage of eligible voters who cast a ballot in an election, an important measure of democratic engagement.

Enfranchised

Refers to giving someone the right to vote in political elections.

Voters

Individuals who have the right to participate in electing leaders and voting on laws and policies in a democratic society.

Turnout Rate

The percentage of eligible voters who cast a ballot in an election.