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Jrgen Knudsen has been hired to provide industry expertise to Henrik Sandell, CFA, an analyst for a pension plan managing a global large-cap fund internally.

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Jrgen Knudsen has been hired to provide industry expertise to Henrik Sandell, CFA, an analyst for a pension plan managing a global large-cap fund internally. Sandell is concerned about one of the fund's larger holdings, auto parts manufacturer Kruspa AB, Kruspa currently operates in 80 countries, with the previous year's global revenues at 5.6 billion. Financial information: market risk premium, Sweden 4.82 percent 4.25 percent Risk-free rate of interest, Sweden Industry debt-to-equity ratio 0.3 Market value of Kruspa's debt 900 million 2.4 billion Market value of Kruspa's equity Kruspa's equity beta 1.3 Kruspa's before-tax cost of debt 9.25 percent 37.5 percent Corporate tax rate 1. What is the Kruspa's debt-equity ratio? A. 0.375 B. 2.667 C. 0.3

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