Balance Corp

question 92

Multiple Choice

Balance Corp.has a weighted average cost of capital equal to 5.5%.If the firm is financed with 25% equity and 75% debt and if the after-tax of that debt is 4%,then what is the cost of equity for the firm?

• A) .025
• B) .06
• C) .1
• D) none of the above

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Definitions:

Research Hypothesis

A specific, testable prediction about what you expect to happen in your study, often based on theoretical expectations or previous research.

Independent Variable

An experimental variable that is intentionally altered to determine its impact on a variable that depends on it.

Dependent Variable

A variable in an experiment or study that is expected to change in response to changes in the independent variable.

Manipulated

Pertains to an independent variable in an experiment that is controlled or changed by the researcher to observe its effect.