Jefferson & Daughter Has a Cost of Equity of 14

Multiple Choice

Jefferson & Daughter has a cost of equity of 14.6 percent and a pre-tax cost of debt of 7.8 percent.The required return on the assets is 13.2 percent.What is the firm's debt-equity ratio based on M & M II with no taxes?

A) 0.26
B) 0.33
C) 0.37
D) 0.43
E) 0.45