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

question 69

Multiple Choice

A firm has a market value of assets of $50,000.It borrows $10,000 at 5%.If the unlevered cost of equity is 15%,what is the firm's cost of equity capital?

• A)15%
• B)17.5%
• C)18.5%
• D)19.2%
• E)20.6%

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Definitions:

Macules

Flat, distinct, discolored areas of skin that are not raised above the surrounding skin.

Lipid-soluble

The term lipid-soluble describes substances that can dissolve in fats and oils, allowing them to pass easily through cell membranes that consist of lipid bilayers.

Furuncles

Also known as boils, these are painful, pus-filled bumps under the skin caused by infected hair follicles.

Friction

The resistance that one surface or object encounters when moving over another, often producing heat.