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 1.The cost of equity is 15% and the cost of debt is 8%.The only difference between Whispering Pines Resort and James Bay Water Park is that Whispering Pines Resort has a debt/equity ratio of 2.What is the cost of equity for Whispering Pines Resort?
A) 11.5%
B) 13.25%
C) 15.0%
D) 18.5%
Correct Answer:
Verified
Correct Answer:
Verified
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