Weston Mines has a cost of equity of 20.8 percent,a pretax cost of debt of 9.4 percent,and a return on assets of 17.1 percent.Ignore taxes.What is the debt-equity ratio?
A)0.39
B)0.41
C)0.48
D)0.56
E)0.62

Name: Weston Mines has a cost of equity of 20.8 percent,a pretax cost of debt of 9.4 percent,and a return on assets of 17.1 percent.Ignore taxes.What is the debt-equity ratio? A)0.39 B)0.41 C)0.48 D)0.56 E)0.62
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Quizplus · Accepted Answer

0.208 = 0.171 + [(0.171 - 0.094) × D/E]D/E = 0.48

Weston Mines Has a Cost of Equity of 20