Multiple Choice
A firm has a debt-to-equity ratio of 1.Its cost of equity is 16 percent and its pretax cost of debt is 8 percent.If there are no taxes or other imperfections,what would be its cost of equity if the debt-to-equity ratio were zero?
A) 8%
B) 10%
C) 12%
D) 14%
E) 16%
Correct Answer:
Verified
Correct Answer:
Verified
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