Question
Bicycle Party (BCP) gear has $100 million in equity and $400 million in debt. BCP can issue debt at 4.0% while the firm's equity cost
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Bicycle Party (BCP) gear has $100 million in equity and $400 million in debt. BCP can issue debt at 4.0% while the firm's equity cost of capital is 9%. Based on this information we conclude that BCP's business risk and financial risk are (in %):
a. 5% and 9%
b. 5% and 4%
c. 9% and 4%
d. 4% and 5%
Bicycle Party (BCP) gear has $100 million in equity and $400 million in debt. BCP can issue debt at 4.0% while the firm's equity cost of capital is 9%. Based on this information we conclude that BCP's business risk and financial risk are (in %):
| a. | 5% and 9% | |
| b. | 5% and 4% | |
| c. | 9% and 4% | |
| d. | 4% and 5% |
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Intermediate Accounting Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
12th Canadian edition
119-49633-5, 1119496497, 1119496330, 978-1119496496
