Your Firm Has a Debt-Equity Ratio of

question 13

Multiple Choice

Your firm has a debt-equity ratio of .60.Your cost of equity is 11% and your after-tax cost of debt is 7%.What will your cost of equity be if the target capital
Structure becomes a 50/50 mix of debt and equity?

• A)9.50%
• B)10.50%
• C)11.00%
• D)11.25%
• E)12.00%