Which of the following equations would NOT be appropriate to use in a firm with risky debt?
A) rE = rU + (D / E) × (rU - rD)
B) rU = rD + (D / E) × (rU - rD)
C) rE = rU + (D / E) × rU
D) rU = [E / (E + D)]rE +[D / (E + D)]rD
Answer: C
Business
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