A Firm Has a Debt-To-Equity Ratio of 1

question 18

Multiple Choice

A firm has a debt-to-equity ratio of 1.If it had no debt, its cost of equity would be 12 percent.Its cost of debt is 9 percent.What is its cost of equity if there are no taxes?

• A)21 percent
• B)18 percent
• C)15 percent
• D)16 percent

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Definitions:

Convert Technique

A method or approach used to change someone's beliefs, behavior, or perception towards a product, idea, or another entity.

Postpone

The action of delaying or deferring an event or arrangement to a later time.

Prospect's Objection

The concerns or hesitations expressed by potential customers or clients during the sales process, which need to be addressed by the seller to successfully close a sale.

Showing a Diagram

The act of presenting a graphical representation of information to visualize concepts, data, or processes.