A firm has a debt-to-equity ratio of 0.5. Its cost of equity is 22%, and its cost
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Question:
A firm has a debt-to-equity ratio of 0.5. Its cost of equity is 22%, and its cost of debt is 16%. If the corporate tax rate is 0.40, what would its cost of equity be if the debt-to-equity ratio were 0?
A. 20.62%
B. 16.00%
C. 26.8%
D. None of the above
Related Book For
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
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