Multiple Choice
A firm has a debt-to-equity ratio of 1. Its levered cost of equity is 16 percent, and its cost of debt is 8 percent. If there were no taxes, what would be its cost of equity if the debt-to-equity ratio were zero?
A) 8 percent
B) 10 percent
C) 12 percent
D) 14 percent
Correct Answer:
Verified
Correct Answer:
Verified
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