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JL Lumber Has a Debt-Equity Ratio of 0

Question 1

Multiple Choice

JL Lumber has a debt-equity ratio of 0.47.The firm's required return on assets is 11.8 percent and its current cost of equity is 14.23 percent.What is the firm's pretax cost of debt? Ignore taxes.


A) 6.45%
B) 6.03%
C) 6.55%
D) 6.40%
E) 6.63%

Correct Answer:

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