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Bigelow, Inc. has a cost (i.e., required return) of equity of 13.56% and a cost of debt of 7%. The unlevered cost of equity is
Bigelow, Inc. has a cost (i.e., required return) of equity of 13.56% and a cost of debt of 7%. The unlevered cost of equity is 11% (this is what the required return on equity would be if the firm had no debt). Assume that capital markets are perfect (no taxes, no possibility of bankruptcy, etc.). What is the firm's debt-equity ratio?
.60
.64
.72
.75
.80
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