Use TheUse the Firm Has Only Been Listed on the Stock

question 96

Multiple Choice

Use theUse the firm has only been listed on the stock exchange for a short time,you do not have an accurate assessment of Nielson's equity beta.However,you do have the following data for another firm in the same industry: Nielson has a much lower debt-equity ratio of .5,which is expected to remain stable,and Nielson's debt is risk free.Nielson's corporate tax rate is 21%,the risk-free rate is 5%,and the expected return on the market portfolio is 10%.
-Nielson's equity cost of capital is closest to:

• A)11.3%.
• B)12.2%.
• C)14.0%.
• D)14.4%.

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Definitions:

Violent Crime

Acts of violence that are punishable by law, often involving physical force or threat.

Faint Odors

Refers to subtle or slight smells that are not strongly perceptible.

Gender

The range of characteristics pertaining to, and differentiating between, masculinity and femininity, often considered in the context of social and cultural differences rather than biological ones.

Socially Influenced

Being affected or shaped by the social forces and the presence of others in one's environment.