Suppose a Firm Has a Cost of Equity of 12

question 52

Multiple Choice

Suppose a firm has a cost of equity of 12%, a D/E ratio of 1/6, and the YTM on its bonds is 7.5%. The risk-free rate is currently 3%. What is the current required rate of return on its assets and equity if the D/E ratio is changed to 1/3? (Round the answer to one decimal place of percentage.)

• A) 11.35% and 13.25%
• B) 11.35% and 8.25%
• C) 13.25% and 11.35%
• D) None of the above

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Definitions:

Ecological View

An approach or perspective that emphasizes the relationships between organisms and their environment.

Constructivist View

An educational theory that emphasizes the learner's active role in constructing knowledge based on their experiences and interactions.

Changes In Hearing

Refers to the alterations or decline in auditory perception that can occur over time due to age, illness, or environmental factors.

Fine Motor Activities

Tasks that involve the use of small muscles in the hands and fingers to perform precise movements, such as writing or buttoning.