If a firm is unlevered and has a cost of equity capital 9%, what would the cost of equity be if the firms became levered at a debt-equity ratio of 2? The expected cost of debt is 7%. (Assume no taxes.)
A) 15.0%
B) 16.0%
C) 14.5%
D) 13%

Question

Quizplus · Accepted Answer

The Answer of If a firm is unlevered and has a cost of equity capital 9%, what would the cost of equity be if the firms became levered at a debt-equity ratio of 2? The expected cost of debt is 7%. (Assume no taxes.)
A) 15.0%
B) 16.0%
C) 14.5%
D) 13%

If a Firm Is Unlevered and Has a Cost of Equity