A Firm Has a Debt-Equity Ratio of

question 74

Multiple Choice

A firm has a debt-equity ratio of .64,a cost of equity of 13.04 percent,and a cost of debt of 8 percent.Assume the corporate tax rate is 25 percent.What would be the cost of equity if the firm were all-equity financed?

• A)11.30 percent
• B)11.41 percent
• C)13.33 percent
• D)12.42 percent
• E)12.25 percent