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Black and White has a cost of equity of 11 percent and a pre-tax cost of debt of 8.5 percent. The firms target weighted average
Black and White has a cost of equity of 11 percent and a pre-tax cost of debt of 8.5 percent. The firms target weighted average cost of capital is 9 percent and its tax rate is 40 percent. What is the firms target debt-equity ratio?
A. 48.29
B. 51.28
C. 55.72
D. 57.56
E. 62.03
________
Suppose the returns on common stocks are approximately normally distributed. If the average return is 17% and a standard deviation of 12% what range of returns would one expect to see 95% of the time?
A. 5% to 29%
B. -7% to 41%
C. -19% to 53%
D. -19% to 53%
E. -27% to 53%
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