Suppose That Rearden Metal Currently Has No Debt and Has

question 17

Multiple Choice

Suppose that Rearden Metal currently has no debt and has an equity cost of capital of 12%.Rearden is considering borrowing funds at a cost of 6% and using these funds to repurchase existing shares of stock.Assume perfect capital markets.If Taggart borrows until they achieved a debt -to-equity ratio of 50%,then Rearden's levered cost of equity would be closest to:

• A) 10.0%
• B) 12.0%
• C) 15.0%
• D) 16.0%

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Definitions:

Dietary Fiber

The indigestible parts of plant foods that help promote a healthy digestive system, can aid in weight management, and prevent certain diseases.

Amino Acids

Organic compounds that combine to form proteins, serving as the building blocks for protein synthesis within the body.

Urine Color

An indicator of hydration status and health, where pale yellow suggests good hydration and darker colors can indicate dehydration or other health issues.

Water

A transparent, tasteless, odorless, and nearly colorless chemical substance that is the primary constituent of Earth's streams, lakes, and oceans, and the fluids of most living organisms.