A firm has zero debt in its capital structure and has an overall cost of capital of 14 percent. The firm is considering a new capital structure with 30 percent debt at an interest rate of 8 percent. Assuming there are no taxes or other imperfections, what would be the cost of equity with the new capital structure?单项选择题

A

14.0 percent

B

12.2 percent

C

14.7 percent

D

16.6 percent

登录即可查看完整答案

我们收录了全球超50000道真实原题与详细解析,现在登录,立即获得答案。

类似问题

Serendipity Inc. is re-evaluating its debt level. Its current capital structure consists of 80% debt and 20% common equity, its beta is 1.60, and its tax rate is 25%. However, the CFO thinks the company has too much debt, and he is considering moving to a capital structure with 40% debt and 60% equity. The risk-free rate is 5.0% and the market risk premium is 6.0%. By how much would the capital structure shift change the firm's cost of equity?

The cost of equity is ________.

Question5 Assume a firm utilizes the security market line (CAPM) approach to determine its cost of equity. Grand Opal Ltd currently pays an annual dividend of $2.10 per share and has a beta of 1.30. All else constant, which of the following actions will decrease the firm’s cost of equity? Investors raise their expectations about the market rate of return. The firm increases its annual dividend to $2.40 per share. The firm restructures its operations so that its beta falls to 1.05. The market risk premium increases. ResetMaximum marks: 1 Flag question undefined

Use CAPM to find the cost of equity capital, if US Treasury rate is 2.6%, Stock Market risk is 11.6% and stock's Beta is 1.3.

更多留学生实用工具

加入我们，立即解锁 海量真题 与 独家解析，让复习快人一步！