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A Firm Has a Market Value of Equity of $40,000

Question 10

Multiple Choice

A firm has a market value of equity of $40,000. It borrows $8000 at 7%. If the unlevered cost of equity is 16%, what is the firm's cost of equity capital?


A) 8.9%
B) 21.4%
C) 17.8%
D) 24.9%

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