Multiple Choice
A firm has zero debt and an overall cost of capital of 13.8 percent.The firm is considering a new capital structure with 40 percent debt.The interest rate on the debt would be 7.2 percent and the corporate tax rate is 21 percent.What would be the cost of equity with the new capital structure?
A) 16.90 percent
B) 16.11 percent
C) 17.28 percent
D) 17.34 percent
E) 17.59 percent
Correct Answer:
Verified
Correct Answer:
Verified
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