Your ﬁrm has a pre-tax cost of debt of 8% and an unlevered cost of capital of 12.5%. Your tax rate is 35% and your cost of equity is 14.34%. What is your debt-equity ratio?
A) .48
B) .52
C) .57
D) .63
E) .67

Question

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The Answer of Your ﬁrm has a pre-tax cost of debt of 8% and an unlevered cost of capital of 12.5%. Your tax rate is 35% and your cost of equity is 14.34%. What is your debt-equity ratio?
A) .48
B) .52
C) .57
D) .63
E) .67

Your ﬁRm Has a Pre-Tax Cost of Debt of 8