A Firm Has a Debt-To-Equity Ratio of 1

question 48

Multiple Choice

A firm has a debt-to-equity ratio of 1.75.If it had no debt, its cost of equity would be 9%.Its cost of debt is 7%.What is its cost of equity if the corporate tax rate is 50%?

• A)7.73%
• B)10.00%
• C)10.75%
• D)12.50%
• E)None of the above.

---

Definitions:

Neurotransmission

The process by which signaling molecules called neurotransmitters are released by a neuron and cross the synaptic gap to reach receptor sites on another neuron, facilitating neuronal communication.

Neurotransmitters

Chemical messengers that transmit signals across a chemical synapse from one neuron to another 'target' neuron, muscle cell, or gland cell.

Gambling

The act of wagering money or something of value on an event with an uncertain outcome, often with the intent of winning additional resources.

Addiction

A chronic disorder characterized by compulsive engagement in rewarding stimuli, despite adverse consequences.