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CTP · Question #609
(Topic 7) Refer to the following information about a company at the end of its fiscal year. The before-tax cost of long-term debt is 10% and the cost of equity is 12%. The marginal tax rate is 35%…
The correct answer is B. 0.67. See the full explanation below for the reasoning.
Question
- (Topic 7)
Refer to the following information about a company at the end of its fiscal year. The before-tax cost of long-term debt is 10% and the cost of equity is 12%. The marginal tax rate is 35%. What is the company's long-term debt to total capitalization ratio?
Options
- A0.44
- B0.67
- C0.73
- D0.78
How the community answered
(46 responses)- A7% (3)
- B76% (35)
- C13% (6)
- D4% (2)
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