Financial accounting question A REIT has an expected total return on equityof 15%, interest on their debt is 9%, and theirdebt-to-total-value ratio is 50%. What is theREIT's average cost of capital?a. 12.2%.b. 10.4%.c. 12.6%.d. 12.0%.

Step 1: Determine the Weight of EquityDebt-to-total-value ratio = 50%Weight of Debt = 50%Weight of…

Answered: A REIT has an expected total return on…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 12EP

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A REIT has an expected total return on equity of 15%, interest on their debt is 9%, and their debt-to-total-value ratio is 50%. What is the REIT's average cost of capital? a. 12.2%. b. 10.4%. c. 12.6%. d. 12.0%.