Salmon Inc

Multiple Choice

Salmon Inc.has debt with both a face and a market value of $227,000.This debt has a coupon rate of 7 percent and pays interest annually.The expected earnings before interest and taxes is $87,200,the tax rate is 21 percent,and the unlevered cost of capital is 12 percent.What is the firm's cost of equity?

A) 13.25 percent
B) 13.89 percent
C) 13.92 percent
D) 14.27 percent
E) 14.14 percent