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CIMA Exam CIMAPRA19-F03-1 Topic 6 Question 80 Discussion
Actual exam question for
CIMA's
CIMAPRA19-F03-1 exam
Question #: 80
Topic #: 6
[All CIMAPRA19-F03-1 Questions]
Topic #: 6
Company WWW is identical in all operating and risk characteristics to Company ZZZ. but their capital structures differ. Company WWW and Company ZZZ both pay corporate income tax at 20%
Company WWW has a gearing ratio (debt: equity) of 1:3 Its pre-tax cost of debt is 6%.
Company ZZZ Is all-equity financed. Its cost of equity is 15%
What is the cost of equity tor Company WWW?
Suggested Answer:
A
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