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A Firm Has a Debt-To-Equity Ratio of 1

Question 41

Multiple Choice

A firm has a debt-to-equity ratio of 1.0. If it had no debt, its cost of equity would be 12 percent. Its cost of debt is 9 percent. What is its cost of equity if there are no taxes?


A) 21 percent
B) 18 percent
C) 15 percent
D) 16 percent

Correct Answer:

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