Multiple Choice
The Corner Bakery has a debt-equity ratio of .53. The required return on assets is 13.5 percent and its cost of equity is 15.8 percent. What is the pretax cost of debt based on M&M Proposition II with no taxes?
A) 8.78 percent
B) 10.68 percent
C) 9.16 percent
D) 7.56 percent
E) 8.40 percent
Correct Answer:
Verified
Correct Answer:
Verified
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