Multiple Choice
The Pizza Shoppe has debt with both a face and a market value of $3,000.This debt has a coupon rate of 7 percent and pays interest annually.The expected earnings before interest and taxes are $1,200,the tax rate is 34 percent,and the unlevered cost of capital is 12 percent.What is the firm's cost of equity?
A) 13.25%
B) 13.89%
C) 13.92%
D) 14.14%
E) 14.25%
Correct Answer:
Verified
Correct Answer:
Verified
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