M&M Proposition 2: Nullaboor Ltd Has a WACC of 11

question 28

Multiple Choice

M&M Proposition 2: Nullaboor Ltd has a WACC of 11%, a cost of debt of 8%, and a cost of equity of 12%. What must the debt-to-equity ratio be?

• A) 1/2
• B) 1/4
• C) 1/6
• D) None of the above.

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Definitions:

Contextual

Pertaining or relating to the circumstances that form the setting for an event, statement, or idea, which are considered as affecting its meaning or significance.

Relational

Pertaining to or concerning the way in which two or more concepts, objects, or people are connected.

Purpose Of Assessment

The rationale or objective behind evaluating or measuring a particular set of skills, knowledge, abilities or performance.

Identification

A psychological process whereby an individual associates themselves closely with another person, adopting their characteristics or viewpoints.