M&M CoHas the Following Characteristics: Perpetual EBIT of $25,000, Zero Financial

Multiple Choice

M&M Co.has the following characteristics: perpetual EBIT of $25,000, zero financial distress costs, unlevered cost of equity = 15%, cost of levered equity 20%, before-tax cost of debt = 10%, and the tax rate is 35%.If the value of M&M Co.is $140,000, then the D/E ratio of M&M Co.is:

A) 0.2923
B) 0.5473
C) 1.8270
D) 3.4211