The Pizza Palace Has a Cost of Equity of 14

Multiple Choice

The Pizza Palace has a cost of equity of 14.4% and an unlevered cost of capital of 10%. The company has $18,000 in debt that is selling at par value. The levered value of the firm is $32,000
And the tax rate is 35%. What is the pre-tax cost of debt?

A) 4.73%
B) 6.18%
C) 6.59%
D) 7.38%
E) 9.92%