A firm has zero debt and an overall cost of capital of 11.7 percent.The firm is considering a new capital structure with 45 percent debt at an interest rate of 6.8 percent.Assume there are no taxes or other imperfections.What will be the levered cost of equity?
A) 16.47%
B) 14.67%
C) 15.80%
D) 15.71%
E) 16.16%
Correct Answer:
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