Multiple Choice
Uptown Appliances has an unlevered cost of capital of 14%, a tax rate of 35%, and expected earnings before interest and taxes of $8,200. The company has $15,000 in bonds outstanding that
Have a 7.5% coupon and pay interest annually. The bonds are selling at par value. What is the cost
Of equity?
A) 16.03%
B) 16.11%
C) 16.24%
D) 16.48%
E) 16.97%
Correct Answer:
Verified
Correct Answer:
Verified
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