Multiple Choice
ABC, Inc. has a debt/equity ratio = 1.2. The firm has a cost of equity of 12% and a cost of debt of 8%. What will the cost of equity be if the target debt/equity ratio increases to 2.0 and the cost of debt
Does not change? Ignore taxes.
A) 10.56%
B) 11.12%
C) 13.46%
D) 14.74%
E) 15.45%
Correct Answer:
Verified
Correct Answer:
Verified
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