ADM 3350 Study Guide - Accounts Receivable, Multiple Choice, Capital Structure
11 Oct 2014
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The net credit period for a company with terms of 3/10 net 60 is: 50 days. In an eps-ebi graphical relationship, the slope of the debt ray is steeper than the equity ray. E) the higher the interest rate the greater the slope. Answer: c: a firm has zero debt in its capital structure. The firm is considering a new capital structure with 60% debt. The interest rate on the debt would be. Assuming there are no taxes or other imperfections, its cost of equity capital with the new capital structure would be: 9%. Answer: d: a firm has a debt-to-equity ratio of 1. Its cost of equity is 16%, and its cost of debt is 8%. If there are no taxes or other imperfections, what would be its cost of equity if the debt-to- equity ratio were 0: 8%.
