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DL Trucking Has a Cost of Equity of 14

Question 15

Multiple Choice

DL Trucking has a cost of equity of 14.4 percent and an unlevered cost of capital of 13 percent.The company has $20,000 in debt that is selling at par value.The levered value of the firm is $46,000 and the tax rate is 35 percent.What is the pretax cost of debt?


A) 11.75%
B) 10.20%
C) 9.38%
D) 11.20%
E) 12.35%

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