What Is Its Cost of Equity If There Are No

question 26

Multiple Choice

What is its cost of equity if there are no taxes or other imperfections? The firm has a debt-to-equity ratio of.60. Its cost of debt is 8%. Its overall cost of capital is 12%.

• A) 18%.
• B) 14.4%.
• C) 10%.
• D) 13.5%.

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Definitions:

After-Tax Lease Payment

After-tax lease payment refers to the lease expense remaining after deducting taxation benefits associated with the lease, illustrating the net cost of leasing to the lessee.

Borrowed Funds Cost

The interest rate and other fees that a borrower must pay for the use of borrowed money.

Tax Rate

How much of an individual's or a business's income is taken as tax by the government.

CCA Class

A classification within the Capital Cost Allowance system in Canada, grouping assets with similar properties for depreciation purposes.