A firm has a debt-to-equity ratio of 0.5. Its cost of equity is 22%, and its cost

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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 answer-question

Principles of Accounting

ISBN: 978-1133626985

12th edition

Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson

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Posted Date: Jan 02, 2021 07:00 PM

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A firm has a debt-to-equity ratio of 0.5. Its cost of equity is 22%, and its cost

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Principles of Accounting

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