Multiple Choice
A firm has a debt-to-equity ratio of .5.Its cost of equity is 22%, and its cost of debt is 16%.If the corporate tax rate is .40, what would its cost of equity be if the debt-to-equity ratio were 0?
A) 14.00%
B) 20.61%
C) 21.07%
D) 22.00%
E) None of the above.
Correct Answer:
Verified
Correct Answer:
Verified
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