Nuclear Widgets Has a Current Cost of Levered Equity Equal

question 81

Multiple Choice

Nuclear Widgets has a current cost of levered equity equal to 13%.Its return on assets is 12% and its cost of debt is 8%.Nuclear Widgets has borrowed a total of $5,000,000.What is the current value of Nuclear Widgets' equity? Ignore the effect of taxes.

• A) $1,250,000
• B) $20,000,000
• C) the problem yields a negative number which means the problem is not realistic
• D) not enough information is given

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