questions

QUESTION 55 For the next 4 questions suppose the following holds: The risk-free rate is 6%, the market risk premium (=E(RM) - RF) is 8%. Assume CAPM holds. A firm has a debt-to-equity ratio of 0.4. The firm's before-tax cost of debt is 10%. The firm's tax rate is 30%. If it had no debt, its cost of equity would be 16%. What is the beta of the firm's debt? O 0.25 O 0.40 O 0.45 O 0.5 O 0.55QUESTION 56 What is the beta of the firm's equity if the firm had no debt? QUESTION 57 What is the beta of the firm's equity when the debt-to-equity ratio is 0.4? QUESTION 58 What is the cost of the rm's equity when the debt-to-equity ratio is 0.4? O 15.28% 0 16.24% 0 16.60% 0 17.68% 0 18.24%