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Your Firm Has a Debt-Equity Ratio of

Question 18

Multiple Choice

Your firm has a debt-equity ratio of .40.Your cost of equity is 12% and your after-tax cost of debt is 6%.What will your cost of equity be if the target capital structure becomes a 50/50 mix of debt and equity?


A) 11.45%
B) 12.00%
C) 13.50%
D) 13.67%
E) 14.56%

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