Using the Original Modigliani and Miller Assumptions If a Firm's

question 103

Multiple Choice

Using the original Modigliani and Miller assumptions if a firm's cost of capital is 12% when it is all equity financed and it's cost of debt is 8%, the cost of equity will be ________% when the firm is financed with equal amount of debt and equity.

• A) 12%
• B) 24%
• C) 16%
• D) cannot be determined with the information given.

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Definitions:

Failing Students

Students who are unable to meet the academic standards or pass the assessments of their educational program.

Confidence Level

A statistical measure expressed as a percentage, indicating the degree of certainty that a parameter lies within a specified range in a confidence interval.