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Bigelow, Inc. has a cost of equity of 13.00% and a pre-tax cost of debt of 7%. The required return on the assets is 11%.

  1. Bigelow, Inc. has a cost of equity of 13.00% and a pre-tax cost of debt of 7%. The required return on the assets is 11%. What is the firm s debt-equity ratio based on MM Proposition II with no taxes?

    a.

    0.80
    b.

    0.64
    c.

    0.75
    d.

    0.50
    e.

    0.72

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