Deitweiler International Has an Unlevered Cost of Capital of 10

Multiple Choice

Deitweiler International has an unlevered cost of capital of 10%, a tax rate of 35%, and expected earnings before interest and taxes of $26,500. The company has $40,000 in bonds outstanding
That have a 7% coupon and pay interest annually. The bonds are selling at par value. What is the
Cost of equity?

A) 9.87%
B) 9.96%
C) 10.27%
D) 10.53%
E) 11.14%