Your firm has a debt-equity ratio of .40.Your cost of equity is 12% and your after-tax cost of debt is 6%.What will your cost of equity be if the target capital structure becomes a 50/50 mix of debt and equity?
A)11.45%
B)12.00%
C)13.50%
D)13.67%
E)14.56%

Question

Quizplus · Accepted Answer

The Answer of Your firm has a debt-equity ratio of .40.Your cost of equity is 12% and your after-tax cost of debt is 6%.What will your cost of equity be if the target capital structure becomes a 50/50 mix of debt and equity?
A)11.45%
B)12.00%
C)13.50%
D)13.67%
E)14.56%

Your Firm Has a Debt-Equity Ratio of