Thompson Feed has a cost of equity of 11.9% and a pre-tax cost of debt of 9%. The required return on the assets is 11%. What is the ﬁrm's debt-equity ratio based on M&M II with no taxes?
A) .40
B) .45
C) .50
D) .55
E) .60

Question

Quizplus · Accepted Answer

The Answer of Thompson Feed has a cost of equity of 11.9% and a pre-tax cost of debt of 9%. The required return on the assets is 11%. What is the ﬁrm's debt-equity ratio based on M&M II with no taxes?
A) .40
B) .45
C) .50
D) .55
E) .60

Thompson Feed Has a Cost of Equity of 11