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%
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Principles Of Managerial Finance Brief
Authors: Chad J. Zutter, Scott B. Smart
8th Global Edition
1292267143, 978-1292267142
