Your ﬁrm has a pre-tax cost of debt of 7% and an unlevered cost of capital of 13%. Your tax rate is 35% and your cost of equity is 15.26%. What is your debt-equity ratio?
A) .43
B) .49
C) .51
D) .54
E) .58

Question

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The Answer of Your ﬁrm has a pre-tax cost of debt of 7% and an unlevered cost of capital of 13%. Your tax rate is 35% and your cost of equity is 15.26%. What is your debt-equity ratio?
A) .43
B) .49
C) .51
D) .54
E) .58

Your ﬁRm Has a Pre-Tax Cost of Debt of 7