TeleNyckel, Inc

question 30

Multiple Choice

TeleNyckel, Inc. has a beta of 1.4 and is trying to calculate its cost of equity capital. If the risk-free rate of return is 9 percent and the market risk premium is 5 percent, then what is the firm's after-tax cost of equity capital if the firm's marginal tax rate is 30 percent?

• A) 11.20%
• B) 10.60%
• C) 15.14%
• D) 16.00%

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Definitions:

Direct Method

A way to allocate service department costs directly to production departments without any intermediate allocations.

Service Department

A segment within a business that provides services, support, or maintenance to other departments or to the business's customers.

Surgery Department

A specialized department within a hospital where surgical procedures are performed.

Computer Workstations

High-performance computers designed for technical or scientific applications, often used in professional contexts.