Your Firm Has a Pre-Tax Cost of Debt of 7

question 6

Multiple Choice

Your firm has a pre-tax cost of debt of 7% and an unlevered cost of capital of 13%. Your tax rate is 35% and your cost of equity is 15.26%. What is your debt-equity ratio?

• A) .43
• B) .49
• C) .51
• D) .54
• E) .58

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Definitions:

Resurgence

The conditioned stimulus (CS) eliciting a conditioned response (CR) in a new context after extinction in conditioning context.

Occasion Setting

The process by which a stimulus signals the appropriate context for a certain response or behavior to occur.

Orbital Frontal Cortex

A region of the frontal lobes of the brain involved in the cognitive processing of decision-making and emotion regulation.

Sutherland and Mackintosh

A reference to influential figures in the field of psychology, possibly related to theories of learning or cognitive processes, but without a specific context, it is imprecise.