The Outlet has a cost of equity of 16.8 percent, a pre-tax cost of debt of 8.1 p

Question

The Outlet has a cost of equity of 16.8 percent, a pre-tax cost of debt of 8.1 percent, and a return on assets of 14.5 percent. Ignore taxes. What is the debt-equity ratio? Question 2 options: 1) 0.28 2) 0.36 3) 0.44 4) 0.52 5) 0.57 The Outlet has a cost of equity of 16.8 percent, a pre-tax cost of debt of 8.1 percent, and a return on assets of 14.5 percent. Ignore taxes. What is the debt-equity ratio? Question 2 options: 1) 0.28 2) 0.36 3) 0.44 4) 0.52 5) 0.57 The Outlet has a cost of equity of 16.8 percent, a pre-tax cost of debt of 8.1 percent, and a return on assets of 14.5 percent. Ignore taxes. What is the debt-equity ratio? The Outlet has a cost of equity of 16.8 percent, a pre-tax cost of debt of 8.1 percent, and a return on assets of 14.5 percent. Ignore taxes. What is the debt-equity ratio? 1) 0.28 2) 0.36 3) 0.44 4) 0.52 5) 0.57 0.28 0.36 0.44 0.52 0.57 1) 0.28 2) 0.36 3) 0.44 4) 0.52 5) 0.57

Explanation / Answer

let debt ratio be x

14.5%= x*8.1% + (1-x)*16.8%

8.7%x =2.3%

x=26.44%

debt-equity ratio =26.44%/(1-26.44%) =0.36

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.