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AFP CTP Question # 11 Topic 2 Discussion

CTP Exam Topic 2 Question 11 Discussion:
Question #: 11
Topic #: 2

Refer to the following information about a company at the end of its fiscal year.

CTP Question 11

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?


A.

0.44


B.

0.67


C.

0.73


D.

0.78


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