Winter's Toyland has a debt-equity ratio of 1.00. The cost of debt is 8 percent and the required return on assets is 15 percent. What is the cost of equity if you ignore taxes? Write your answer as a percent rounded to two digits, but don't include the % sign (i.e. write 12.63, not 0.1263).

Winter's Toyland has a debt-equity ratio of 1.00. The cost of debt is 8 percent and the required return on assets is 15 percent. What is the cost of equity if you ignore taxes? Write your answer as a percent rounded to two digits, but don't include the % sign (i.e. write 12.63, not 0.1263).

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Winter's Toyland has a debt-equity ratio of 1.00. The cost of debt is 8 percent and the required return on assets is 15 percent. What is the
cost of equity if you ignore taxes? Write your answer as a percent rounded to two digits, but don't include the % sign (i.e. write 12.63, not
0.1263).
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