Down Bedding Has an Unlevered Cost of Capital of 14

question 73

Multiple Choice

Down Bedding has an unlevered cost of capital of 14 percent,a cost of debt of 7.8 percent,and a tax rate of 32 percent.What is the target debt-equity ratio if the targeted cost of equity is 15.51 percent?

• A).24
• B).29
• C).36
• D).52
• E).71

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Definitions:

Punitive Damages

Financial compensation awarded to an injured party, beyond actual damages, intended to punish the wrongdoer.

Compensate

To provide something, usually money, to someone in recognition of loss, suffering, or injury incurred; to make up for something unwelcome or unpleasant.

Victims

Individuals or entities who suffer harm or loss due to another's actions or events beyond their control.

Invasion of Privacy

Unauthorized intrusion into the personal life of another, without just cause, which can give the person whose privacy has been invaded a right to bring a lawsuit.