Multiple Choice
A firm has a debt-to-equity ratio of 1. Its cost of equity is 16%,and its cost of debt is 8%. If the corporate tax rate is 25%,what would the cost of equity be if the debt-to-equity ratio were 0?
A) 11.11%
B) 12.57%
C) 13.33%
D) 16.00%
E) None of these.
Correct Answer:
Verified
Correct Answer:
Verified
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