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Hey Guys Has Debt with Both a Face and a Market

Question 47

Multiple Choice

Hey Guys has debt with both a face and a market value of €3,000.This debt has a coupon rate of 7% and pays interest annually.The expected earnings before interest and taxes is €1,200, the tax rate is 34%, and the unlevered
Cost of capital is 12%.What is the firm's cost of equity?


A) 13.25%
B) 13.89%
C) 13.92%
D) 14.14%
E) 14.25%

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