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Calculate Cost Of Equity With Debt To Equity Ratio Pre-Cost Of Debt Given

Question

Your firm has a debt-equity ratio of 0.75. Your pre-tax cost of debt is 8.5% and your required return on assets is 15%.

What is your cost of equity if you ignore taxes?

A. 11.25%
B. 12.21%
C. 16.67%
D. 19.88%
E. 21.38%
F. None of the above


Summary

The question belongs to Finance and it discusses about calculation of cost of equity with debt to equity ratio, pre-cost of debt and return on assets being given.

Total Word Count 73

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    Giuseppe

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