Calculation of cost of equity with debt to equity ratio

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Reference no: EM13827102

Problem:

Your firm has a debt-equity ratio of 0.75. Your pre-tax cost of debt is 8.5% and your required return on assets is 15%.

What is your cost of equity if you ignore taxes?

A. 11.25%

B. 12.21%

C. 16.67%

D. 19.88%

E. 21.38%

F. None of the above

Summary of question:

This question belongs basically to Finance as well as it explains about calculation of cost of equity with debt to equity ratio, pre-cost of debt and return on assets being given.

Reference no: EM13827102

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