Presley Cleaners Has an All-Equity Capital Structure with an Equity

Multiple Choice

Presley Cleaners has an all-equity capital structure with an equity value of $64,100.The expected earnings are $8,900 based on estimated sales of $60,000.The firm pays no taxes.What is the cost of capital?

A) 13.88%
B) 12.08%
C) 14.83%
D) 14.34%
E) 12.37%