A Firm Uses Only Debt and Equity in Its Capital

question 102

Multiple Choice

A firm uses only debt and equity in its capital structure. The firm's weight of debt is 40 percent. The firm could issue new bonds at a yield to maturity of 9 percent and the firm has a tax rate of 30 percent. If the firm's WACC is 11 percent, what is the firm's cost of equity?

• A)15.92 percent
• B)14.13 percent
• C)15.03 percent
• D)15.68 percent

---

Definitions:

Delivery

The process of transporting goods from one place to another or the act of handing over something to a recipient.

Rotating Handles

Mechanical components designed to pivot around an axis, facilitating the operation or movement of an object.

Pruning Shears

A gardening tool used for trimming and shaping plants by cutting away dead or overgrown branches and stems.

Blade Length

The measurement of a blade from its tip to the start of the handle or hilt.