The Outlet Has an Unlevered Cost of Capital of 14

Multiple Choice

The Outlet has an unlevered cost of capital of 14.2 percent,a tax rate of 35 percent,and expected earnings before interest and taxes of $23,400.The company has $23,000 in bonds outstanding that have a coupon rate of 7 percent.The bonds are selling at par.What is the cost of equity?

A) 14.31%
B) 15.08%
C) 14.59%
D) 14.64%
E) 15.37%