Hey Guys!, Inc

Multiple Choice

Hey Guys!, Inc. has debt with both a book 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 are $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%