Multiple Choice
James Bay Water Park operates in a world with zero taxes and no financial distress.The firm has a debt/equity ratio of 2.The cost of equity is 20%.The only difference between Whispering Pines Resort and James Bay Water Park is that Whispering Pines Resort has a debt/equity ratio of 0 and has a cost of equity of 15%.What is the cost of debt for James Bay Water Park?
A) 5.0%
B) 10.0%
C) 12.5%
D) 17.5%
Correct Answer:
Verified
Correct Answer:
Verified
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