Multiple Choice
Exhibit 17.1
Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.
-Refer to Exhibit 17.1.What is the firm's cost of equity?
A) 21.0%
B) 23.3%
C) 25.9%
D) 28.8%
E) 32.0%
Correct Answer:
Verified
Correct Answer:
Verified
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