罗斯公司理财题库cha

.精选文档.Chapter16CapitalStructure:BasicConcepts MultipleChoiceQuestions 1. Theuseofpersonalborrowingtochangetheoverallamountoffinancialleveragetowhichanindividualisexposediscalled: A. homemadeleverage.B. dividendrecapture.C. theweightedaveragecostofcapital.D. privatedebtplacement.E. personaloffset. 2. Thepropositionthatthevalueofthefirmisindependentofitscapitalstructureiscalled: A. thecapitalassetpricingmodel.B. MMPropositionI.C. MMPropositionII.D. thelawofoneprice.E. theefficientmarketshypothesis. 3. Thepropositionthatthecostofequityisapositivelinearfunctionofcapitalstructureiscalled: A. thecapitalassetpricingmodel.B. MMPropositionI.C. MMPropositionII.D. thelawofoneprice.E. theefficientmarketshypothesis. 4. Thetaxsavingsofthefirmderivedfromthedeductibilityofinterestexpenseiscalledthe: A. interesttaxshield.B. depreciablebasis.C. financingumbrella.D. currentyield.E. tax-losscarryforwardsavings. 5. Theunleveredcostofcapitalis: A. thecostofcapitalforafirmwithnoequityinitscapitalstructure.B. thecostofcapitalforafirmwithnodebtinitscapitalstructure.C. theinteresttaxshieldtimespretaxnetincome.D. thecostofpreferredstockforafirmwithequalpartsdebtandcommonstockinitscapitalstructure.E. equaltotheprofitmarginforafirmwithsomedebtinitscapitalstructure. 6. Thecostofcapitalforafirm,rWACC,inazerotaxenvironmentis: A. equaltotheexpectedearningsdividedbymarketvalueoftheunleveredfirm.B. equaltotherateofreturnforthatbusinessriskclass.C. equaltotheoverallrateofreturnrequiredontheleveredfirm.D. isconstantregardlessoftheamountofleverage.E. Alloftheabove. 7. Thedifferencebetweenamarketvaluebalancesheetandabookvaluebalancesheetisthatamarketvaluebalancesheet: A. placesassetsontherighthandside.B. placesliabilitiesonthelefthandside.C. doesnotequatetherighthandwiththelefthandside.D. listsitemsintermsofmarketvalues,nothistoricalcosts.E. usesthemarketrateofreturn. 8. Thefirm'scapitalstructurerefersto: A. thewayafirminvestsitsassets.B. theamountofcapitalinthefirm.C. theamountofdividendsafirmpays.D. themixofdebtandequityusedtofinancethefirm'sassets.E. howmuchcashthefirmholds. 9. Ageneralruleformanagerstofollowistosetthefirm'scapitalstructuresuchthat: A. thefirm'svalueisminimized.B. thefirm'svalueismaximized.C. thefirm'sbondholdersaremadewelloff.D. thefirmssuppliersofrawmaterialsaresatisfied.E. thefirmsdividendpayoutismaximized. 10. Aleveredfirmisacompanythathas: A. AccountsPayableastheonlyliabilityonthebalancesheet.B. somedebtinthecapitalstructure.C. allequityinthecapitalstructure.D. Alloftheabove.E. Noneoftheabove. 11. Amanagershouldattempttomaximizethevalueofthefirmby: A. changingthecapitalstructureifandonlyifthevalueofthefirmincreases.B. changingthecapitalstructureifandonlyifthevalueofthefirmincreasestothebenefitofinsidemanagement.C. changingthecapitalstructureifandonlyifthevalueofthefirmincreasesonlytothebenefitsofthedebtholders.D. changingthecapitalstructureifandonlyifthevalueofthefirmincreasesalthoughitdecreasesthestockholders'value.E. changingthecapitalstructureifandonlyifthevalueofthefirmincreasesandstockholderwealthisconstant. 12. Theeffectoffinancialleveragedependsontheoperatingearningsofthecompany.Whichofthefollowingisnottrue? A. Belowtheindifferenceorbreak-evenpointinEBITthenon-leveredstructureissuperior.B. FinancialleverageincreasestheslopeoftheEPSline.C. Abovetheindifferenceorbreak-evenpointtheincreaseinEPSforallequitystructuresislessthandebt-equitystructures.D. Abovetheindifferenceorbreak-evenpointtheincreaseinEPSforallequitystructuresisgreaterthandebt-equitystructures.E. Therateofreturnonoperatingassetsisunaffectedbyleverage. 13. TheModigliani-MillerPropositionIwithouttaxesstates: A. afirmcannotchangethetotalvalueofitsoutstandingsecuritiesbychangingitscapitalstructureproportions.B. whennewprojectsareaddedtothefirmthefirmvalueisthesumoftheoldvalueplusthenew.C. managerscanmakecorrectcorporatedecisionsthatwillsatisfyallshareholdersiftheyselectprojectsthatmaximizevalue.D. thedeterminationofvaluemustconsiderthetimingandriskofthecashflows.E. Noneoftheabove. 14. MMPropositionIwithouttaxesisusedtoillustrate: A. thevalueofanunleveredfirmequalsthatofaleveredfirm.B. thatonecapitalstructureisasgoodasanother.C. leveragedoesnotaffectthevalueofthefirm.D. capitalstructurechangeshavenoeffectonstockholders'welfare.E. Alloftheabove. 15. AkeyassumptionofMM'sPropositionIwithouttaxesis: A. thatfinancialleverageincreasesrisk.B. thatindividualscanborrowontheirownaccountatrateslessthanthefirm.C. thatindividualsmustbeabletoborrowontheirownaccountatratesequaltothefirm.D. managersareactingtomaximizethevalueofthefirm.E. Alloftheabove. 16. InanEPS-EBIgraphicalrelationship,theslopeofthedebtrayissteeperthantheequityray.Thedebtrayhasalowerinterceptbecause: A. moresharesareoutstandingforthesamelevelofEBI.B. thebreak-evenpointishigherwithdebt.C. afixedinterestchargemustbepaidevenatlowearnings.D. theamountofinterestpersharehasonlyapositiveeffectontheintercept.E. thehighertheinterestratethegreatertheslope. 17. InanEPS-EBIgraphicalrelationship,thedebtrayandequityraycross.Atthispointtheequityanddebtare: A. equivalentwithrespecttoEPSbutaboveandbelowthispointequityisalwayssuperior.B. atbreakeveninEPSbutabovethispointdebtincreasesEPSvialeverageanddecreasesEPSbelowthispoint.C. equalbutawayfrombreakevenequityisbetterasfewersharesareoutstanding.D. atbreakevenandMMPropositionIIstatesthatdebtisthebetterchoice.E. atbreakevenanddebtisthebetterchoicebelowbreakevenbecausesmallpaymentscanbemade. 18. Whencomparingleveredvs.unleveredcapitalstructures,leverageworkstoincreaseEPSforhighlevelsofEBITbecause: A. interestpaymentsonthedebtvarywithEBITlevels.B. interestpaymentsonthedebtstayfixed,leavinglessincometobedistributedoverlessshares.C. interestpaymentsonthedebtstayfixed,leavingmoreincometobedistributedoverlessshares.D. interestpaymentsonthedebtstayfixed,leavinglessincometobedistributedovermoreshares.E. interestpaymentsonthedebtstayfixed,leavingmoreincometobedistributedovermoreshares. 19. Financialleverageimpactstheperformanceofthefirmby: A. maintainingthesamelevelofvolatilityofthefirm'sEBIT.B. decreasingthevolatilityofthefirm'sEBIT.C. decreasingthevolatilityofthefirm'snetincome.D. increasingthevolatilityofthefirm'snetincome.E. Noneoftheabove. 20. Theincreaseinrisktoequityholderswhenfinancialleverageisintroducedisevidencedby: A. higherEPSasEBITincreases.B. ahighervariabilityofEPSwithdebtthanallequity.C. increaseduseofhomemadeleverage.D. equivalencevaluebetweenleveredandunleveredfirmsinthepresenceoftaxes.E. Noneoftheabove. 21. ThereasonthatMMPropositionIdoesnotholdinthepresenceofcorporatetaxationisbecause: A. leveredfirmspaylesstaxescomparedwithidenticalunleveredfirms.B. bondholdersrequirehigherratesofreturncomparedwithstockholders.C. earningspersharearenolongerrelevantwithtaxes.D. dividendsarenolongerrelevantwithtaxes.E. Alloftheabove. 22. MMPropositionIwithcorporatetaxesstatesthat: A. capitalstructurecanaffectfirmvalue.B. byraisingthedebt-to-equityratio,thefirmcanloweritstaxesandtherebyincreaseitstotalvalue.C. firmvalueismaximizedatanalldebtcapitalstructure.D. Alloftheabove.E. Noneoftheabove. 23. Thechangeinfirmvalueinthepresenceofcorporatetaxesonlyis: A. positiveasequityholdersfacealowereffectivetaxrate.B. positiveasequityholdersgainthetaxshieldonthedebtinterest.C. negativebecauseoftheincreasedriskofdefaultandfewersharesoutstanding.D. negativebecauseofareductionofequityoutstanding.E. Noneoftheabove. 24. Afirmshouldselectthecapitalstructurewhich: A. producesthehighestcostofcapital.B. maximizesthevalueofthefirm.C. minimizestaxes.D. isfullyunlevered.E. hasnodebt. 25. Inaworldofnocorporatetaxesiftheuseofleveragedoesnotchangethevalueoftheleveredfirmrelativetotheunleveredfirmisknownas: A. MMPropositionIIIthatthecostofstockislessthanthecostofdebt.B. MMPropositionIthatleverageisinvarianttomarketvalue.C. MMPropositionIIthatthecostofequityisalwaysconstant.D. MMPropositionIthatthemarketvalueofthefirmisinvarianttothecapitalstructure.E. MMPropositionIIIthatthereisnoriskassociatedwithleverageinanotaxworld. 26. BryaninvestedinBryco,Inc.stockwhenthefirmwasfinancedsolelywithequity.Thefirmisnowutilizingdebtinitscapitalstructure.Tounleverhisposition,Bryanneedsto: A. borrowsomemoneyandpurchaseadditionalsharesofBrycostock.B. maintainhiscurrentpositionasthedebtofthefirmdidnotaffecthispersonalleverageposition.C. sellsomesharesofBrycostockandholdtheproceedsincash.D. sellsomesharesofBrycostockandloanitoutsuchthathecreatesapersonaldebt-equityratioequaltothatofthefirm.E. createapersonaldebt-equityratiothatisequaltoexactly50%ofthedebt-equityratioofthefirm. 27. Thecapitalstructurechosenbyafirmdoesn'treallymatterbecauseof: A. taxes.B. theinteresttaxshield.C. therelationshipbetweendividendsandearningspershare.D. theeffectsofleverageonthecostofequity.E. homemadeleverage. 28. MMPropositionIwithnotaxsupportstheargumentthat: A. businessriskdeterminesthereturnonassets.B. thecostofequityrisesasleveragerises.C. itiscompletelyirrelevanthowafirmarrangesitsfinances.D. afirmshouldborrowmoneytothepointwherethetaxbenefitfromdebtisequaltothecostoftheincreasedprobabilityoffinancialdistress.E. financialriskisdeterminedbythedebt-equityratio. 29. Thepropositionthatthevalueofaleveredfirmisequaltothevalueofanunleveredfirmisknownas: A. MMPropositionIwithnotax.B. MMPropositionIIwithnotax.C. MMPropositionIwithtax.D. MMPropositionIIwithtax.E. statictheoryproposition. 30. Theconceptofhomemadeleverageismostassociatedwith: A. MMPropositionIwithnotax.B. MMPropositionIIwithnotax.C. MMPropositionIwithtax.D. MMPropositionIIwithtax.E. statictheoryproposition. 31. WhichofthefollowingstatementsarecorrectinrelationtoMMPropositionIIwithnotaxes?I.Therequiredreturnonassetsisequaltotheweightedaveragecostofcapital.II.Financialriskisdeterminedbythedebt-equityratio.III.Financialriskdeterminesthereturnonassets.IV.Thecostofequitydeclineswhentheamountofleverageusedbyafirmrises. A. IandIIIonlyB. IIandIVonlyC. IandIIonlyD. IIIandIVonlyE. IandIVonly 32. MMPropositionIwithtaxessupportsthetheorythat: A. thereisapositivelinearrelationshipbetweentheamountofdebtinaleveredfirmanditsvalue.B. thevalueofafirmisinverselyrelatedtotheamountofleverageusedbythefirm.C. thevalueofanunleveredfirmisequaltothevalueofaleveredfirmplusthevalueoftheinteresttaxshield.D. afirm'scostofcapitalisthesameregardlessofthemixofdebtandequityusedbythefirm.E. afirm'sweightedaveragecostofcapitalincreasesasthedebt-equityratioofthefirmrises. 33. MMPropositionIwithtaxesisbasedontheconceptthat: A. theoptimalcapitalstructureistheonethatistotallyfinancedwithequity.B. thecapitalstructureofthefirmdoesnotmatterbecauseinvestorscanusehomemadeleverage.C. thefirmisbetteroffwithdebtbasedontheweightedaveragecostofcapital.D. thevalueofthefirmincreasesastotaldebtincreasesbecauseoftheinteresttaxshield.E. thecostofequityincreasesasthedebt-equityratioofafirmincreases. 34. MMPropositionIIwithtaxes: A. hasthesamegeneralimplicationsasMMPropositionIIwithouttaxes.B. revealshowtheinteresttaxshieldrelatestothevalueofafirm.C. supportstheargumentthatbusinessriskisdeterminedbythecapitalstructureemployedbyafirm.D. supportstheargumentthatthecostofequitydecreasesasthedebt-equityratioincreases.E. reachesthefinalconclusionthatthecapitalstructuredecisionisirrelevanttothevalueofafirm. 35. MMPropositionIIisthepropositionthat: A. supportstheargumentthatthecapitalstructureofafirmisirrelevanttothevalueofthefirm.B. thecostofequitydependsonthereturnondebt,thedebt-equityratioandthetaxrate.C. afirm'scostofequitycapitalisapositivelinearfunctionofthefirm'scapitalstructure.D. thecostofequityisequivalenttotherequiredreturnonthetotalassetsofafirm.E. supportstheargumentthatthesizeofthepiedoesnotdependonhowthepieissliced. 36. Theinteresttaxshieldhasnovalueforafirmwhen:I.thetaxrateisequaltozero.II.thedebt-equityratioisexactlyequalto1.III.thefirmisunlevered.IV.afirmelects100%equityasitscapitalstructure. A. IandIIIonlyB. IIandIVonlyC. I,III,andIVonlyD. II,III,andIVonlyE. I,II,andIVonly 37. Theinteresttaxshieldisakeyreasonwhy: A. therequiredrateofreturnonassetsriseswhendebtisaddedtothecapitalstructure.B. thevalueofanunleveredfirmisequaltothevalueofaleveredfirm.C. thenetcostofdebttoafirmisgenerallylessthanthecostofequity.D. thecostofdebtisequaltothecostofequityforaleveredfirm.E. firmspreferequityfinancingoverdebtfinancing. 38. Whichofthefollowingwilltendtodiminishthebenefitoftheinteresttaxshieldgivenaprogressivetaxratestructure?I.areductionintaxratesII.alargetaxlosscarryforwardIII.alargedepreciationtaxdeductionIV.asizeableincreaseintaxableincome A. IandIIonlyB. IandIIIonlyC. IIandIIIonlyD. I,II,andIIIonlyE. I,II,III,andIV 39. Thompson&Thomsonisanallequityfirmthathas500,000sharesofstockoutstanding.Thecompanyisintheprocessofborrowing$8millionat9%interesttorepurchase200,000sharesoftheoutstandingstock.Whatisthevalueofthisfirmifyouignoretaxes? A. $20.0millionB. $20.8millionC. $21.0millionD. $21.2millionE. $21.3million 40. UptownInteriorDesignsisanallequityfirmthathas40,000sharesofstockoutstanding.Thecompanyhasdecidedtoborrow$1milliontobuyoutthesharesofadeceasedstockholderwhoholds2,500shares.Whatisthetotalvalueofthisfirmifyouignoretaxes? A. $15.5millionB. $15.6millionC. $16.0millionD. $16.8millionE. $17.2million 41. Youown25%ofUniqueVacations,Inc.Youhavedecidedtoretireandwanttosellyoursharesinthiscloselyheld,allequityfirm.Theothershareholdershaveagreedtohavethefirmborrow$1.5milliontopurchaseyour1,000sharesofstock.Whatisthetotalvalueofthisfirmtodayifyouignoretaxes? A. $4.8millionB. $5.1millionC. $5.4millionD. $5.7millionE. $6.0million 42. Yourfirmhasadebt-equityratioof.75.Yourpre-taxcostofdebtis8.5%andyourrequiredreturnonassetsis15%.Whatisyourcostofequityifyouignoretaxes? A. 11.25%B. 12.21%C. 16.67%D. 19.88%E. 21.38% 43. Bigelow,Inc.hasacostofequityof13.56%andapre-taxcostofdebtof7%.Therequiredreturnontheassetsis11%.Whatisthefirm'sdebt-equityratiobasedonMMPropositionIIwithnotaxes? A. .60B. .64C. .72D. .75E. .80 44. TheBackwoodsLumberCo.hasadebt-equityratioof.80.Thefirm'srequiredreturnonassetsis12%anditscostofequityis15.68%.Whatisthepre-taxcostofdebtbasedonMMPropositionIIwithnotaxes? A. 6.76%B. 7.00%C. 7.25%D. 7.40%E. 7.50% 45. TheWinterWearCompanyhasexpectedearningsbeforeinterestandtaxesof$2,100,anunleveredcostofcapitalof14%andataxrateof34%.Thecompanyalsohas$2,800ofdebtthatcarriesa7%coupon.Thedebtissellingatparvalue.Whatisthevalueofthisfirm? A. $9,900B. $10,852C. $11,748D. $12,054E. $12,700 46. Gail'sDanceStudioiscurrentlyanallequityfirmthathas80,000sharesofstockoutstandingwithamarketpriceof$42ashare.Thecurrentcostofequityis12%andthetaxrateis34%.Gailisconsideringadding$1millionofdebtwithacouponrateof8%tohercapitalstructure.Thedebtwillbesoldatparvalue.Whatistheleveredvalueoftheequity? A. $2.4millionB. $2.7millionC. $3.3millionD. $3.7millionE. $3.9million 47. TheMontanaHillsCo.hasexpectedearningsbeforeinterestandtaxesof$8,100,anunleveredcostofcapitalof11%,anddebtwithbothabookandfacevalueof$12,000.Thedebthasanannual8%coupon.Thetaxrateis34%.Whatisthevalueofthefirm? A. $48,600B. $50,000C. $52,680D. $56,667E. $60,600 48. Scott'sLeisureTimeSportsisanunleveredfirmwithanafter-taxnetincomeof$86,000.Theunleveredcostofcapitalis10%andthetaxrateis34%.Whatisthevalueofthisfirm? A. $567,600B. $781,818C. $860,000D. $946,000E. $1,152,400 49. Anunleveredfirmhasacostofcapitalof14%andearningsbeforeinterestandtaxesof$150,000.Aleveredfirmwiththesameoperationsandassetshasbothabookvalueandafacevalueofdebtof$700,000witha7%annualcoupon.Theapplicabletaxrateis35%.Whatisthevalueoftheleveredfirm? A. $696,429B. $907,679C. $941,429D. $1,184,929E. $1,396,429 50. TheSpartanCo.hasanunleveredcostofcapitalof11%,acostofdebtof8%,andataxrateof35%.Whatisthetargetdebt-equityratioifthetargetedcostofequityis12%? A. .44B. .49C. .51D. .56E. .62 51. HeyGuys!,Inc.hasdebtwithbothafaceandamarketvalueof$3,000.Thisdebthasacouponrateof7%andpaysinterestannually.Theexpectedearningsbeforeinterestandtaxesis$1,200,thetaxrateis34%,andtheunleveredcostofcapitalis12%.Whatisthefirm'scostofequity? A. 13.25%B. 13.89%C. 13.92%D. 14.14%E. 14.25% 52. Anderson'sFurnitureOutlethasanunleveredcostofcapitalof10%,ataxrateof34%,andexpectedearningsbeforeinterestandtaxesof$1,600.Thecompanyhas$3,000inbondsoutstandingthathavean8%couponandpayinterestannually.Thebondsaresellingatparvalue.Whatisthecostofequity? A. 8.67%B. 9.34%C. 9.72%D. 9.99%E. 10.46% 53. Walter'sDistributorshasacostofequityof13.84%andanunleveredcostofcapitalof12%.Thecompanyhas$5,000indebtthatissellingatparvalue.Theleveredvalueofthefirmis$12,000andthetaxrateis34%.Whatisthepre-taxcostofdebt? A. 7.92%B. 8.10%C. 8.16%D. 8.84%E. 9.00% 54. Rosita'shasacostofequityof13.8%andapre-taxcostofdebtof8.5%.Thedebt-equityratiois.60andthetaxrateis.34.WhatisRosita'sunleveredcostofcapital? A. 8.83%B. 12.30%C. 13.97%D. 14.08%E. 14.60% 55. Yourfirmhasapre-taxcostofdebtof7%andanunleveredcostofcapitalof13%.Yourtaxrateis35%andyourcostofequityis15.26%.Whatisyourdebt-equityratio? A. .43B. .49C. .51D. .54E. .58 56. WildFlowersExpresshasadebt-equityratioof.60.Thepre-taxcostofdebtis9%whiletheunleveredcostofcapitalis14%.Whatisthecostofequityifthetaxrateis34%? A. 7.52%B. 8.78%C. 15.98%D. 16.83%E. 17.30% 57. Yourfirmhasa$250,000bondissueoutstanding.Thesebondshavea7%coupon,payinterestsemiannually,andhaveacurrentmarketpriceequalto103%offacevalue.Whatistheamountoftheannualinteresttaxshieldgivenataxrateof35%? A. $6,125B. $6,309C. $9,500D. $17,500E. $18,025 58. Bertha'sBoutiquehas2,000bondsoutstandingwithafacevalueof$1,000eachandacouponrateof9%.Theinterestispaidsemi-annually.Whatistheamountoftheannualinteresttaxshieldifthetaxrateis34%? A. $58,500B. $60,100C. $60,750D. $61,200E. $62,250 59. Juanita'sSteakHousehas$12,000ofdebtoutstandingthatissellingatparandhasacouponrateof8%.Thetaxrateis34%.Whatisthepresentvalueofthetaxshield? A. $2,823B. $2,887C. $4,080D. $4,500E. $4,633 60. Afirmhasdebtof$5,000,equityof$16,000,aleveragedvalueof$8,900,acostofdebtof8%,acostofequityof12%,andataxrateof34%.Whatisthefirm'sweightedaveragecostofcapital? A. 7.29%B. 7.94%C. 8.87%D. 10.40%E. 11.05% 61. Afirmhaszerodebtinitscapitalstructure.Itsoverallcostofcapitalis10%.Thefirmisconsideringanewcapitalstructurewith60%debt.Theinterestrateonthedebtwouldbe8%.Assumingtherearenotaxesorotherimperfections,itscostofequitycapitalwiththenewcapitalstructurewouldbe_____. A. 9%B. 10%C. 13%D. 14%E. Noneoftheabove. 62. Afirmhasadebt-to-equityratioof.60.Itscostofdebtis8%.Itsoverallcostofcapitalis12%.Whatisitscostofequityiftherearenotaxesorotherimperfections? A. 10.0%B. 13.5%C. 14.4%D. 18.0%E. Noneoftheabove. 63. Afirmhasadebt-to-equityratioof1.Itscostofequityis16%,anditscostofdebtis8%.Iftherearenotaxesorotherimperfections,whatwouldbeitscostofequityifthedebt-to-equityratiowere0? A. 8%B. 10%C. 12%D. 14%E. 16% 64. Afirmhasadebt-to-equityratioof1.20.Ifithadnodebt,itscostofequitywouldbe15%.Itscostofdebtis10%.Whatisitscostofequityiftherearenotaxesorotherimperfections? A. 10%B. 15%C. 18%D. 21%E. Noneoftheabove. 65. Ifafirmisunleveredandhasacostofequitycapitalof12%,whatwoulditscostofequitybeifitsdebt-equityratiobecame2?Theexpectedcostofdebtis8%. A. 14.0%B. 14.67%C. 16.0%D. 20.0%E. Noneoftheabove. 66. Afirmhaszerodebtinitscapitalstructure.Itsoverallcostofcapitalis9%.Thefirmisconsideringanewcapitalstructurewith40%debt.Theinterestrateonthedebtwouldbe4%.Assumingthatthecorporatetaxrateis34%,whatwoulditscostofequitycapitalwiththenewcapitalstructurebe? A. 10.3%B. 11.0%C. 11.2%D. 13.9%E. Noneoftheabove. 67. Afirmhasadebt-to-equityratioof1.Itscostofequityis16%,anditscostofdebtis8%.Ifthecorporatetaxrateis25%,whatwoulditscostofequitybeifthedebt-to-equityratiowere0? A. 11.11%B. 12.57%C. 13.33%D. 16.00%E. Noneoftheabove. 68. Afirmhasadebt-to-equityratioof.5.Itscostofequityis22%,anditscostofdebtis16%.Ifthecorporatetaxrateis.40,whatwoulditscostofequitybeifthedebt-to-equityratiowere0? A. 14.00%B. 20.61%C. 21.07%D. 22.00%E. Noneoftheabove. 69. Afirmhasadebt-to-equityratioof1.75.Ifithadnodebt,itscostofequitywouldbe14%.Itscostofdebtis10%.Whatisitscostofequityifthecorporatetaxrateis50%? A. 14.0%B. 16.0%C. 17.5%D. 21.0%E. Noneoftheabove. 70. Whatisthecostofequityforafirmifthecorporateta