M&M Proposition 2: Bellamee, Inc

question 75

Multiple Choice

M&M Proposition 2: Bellamee, Inc., has a required rate of return on its assets of 12% and a cost of debt of 6.25%. Their current debt-to-equity ratio is 1/5. What is the required rate of return on their equity?

• A) 12.15%
• B) 13.15%
• C) 14.15%
• D) None of the above