A Firm Has a Market Value of Assets of $50,000

question 59

Multiple Choice

A firm has a market value of assets of $50,000.It borrows $10,000 at 3%.If the unlevered cost of equity is 15%,what is the firm's cost of equity capital?

• A)16%
• B)17%
• C)18%
• D)19%

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Definitions:

Molecular Thinking

An approach that focuses on the detailed examination and understanding of the components of a problem or system.

Inflexible Strategies

Business approaches or plans that are rigid and cannot easily adapt to changes in the market or environment, potentially leading to failure.

Nimble Tactics

Agile and adaptable strategies designed to respond quickly to change and capitalize on new opportunities.

Durability

The quality of being able to withstand wear, pressure, or damage; the ability of a product or material to last a long time without significant degradation.