What Is Its Cost of Equity for a Firm If

question 65

Multiple Choice

What is its cost of equity for a firm if the corporate tax rate is 40%? The firm has a debt-to-equity ratio of 1.5.If it had no debt,its cost of equity would be 16%.Its current cost of debt is 12%.

• A)17.4%
• B)18.4%
• C)19.6%
• D)21.4%
• E)None of the above.

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