Multiple Choice
The Backwoods Lumber Co. has a debt-equity ratio of .80. The firm's required return on assets is 12% and its cost of equity is 15.68%. What is the pre-tax cost of debt based on MM Proposition II with no taxes?
A) 6.76%
B) 7.00%
C) 7.25%
D) 7.40%
E) 7.50%
Correct Answer:
Verified
Correct Answer:
Verified
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