The Outlet has an unlevered cost of capital of 15.1 percent,a tax rate of 34 percent,and expected earnings before interest and taxes of $26,100.The company has $25,000 in bonds outstanding that have a coupon rate of 7.6 percent.The bonds are selling at par.What is the cost of equity?
A)14.31%
B)15.08%
C)16.59%
D)14.64%
E)16.37%

Question

Quizplus · Accepted Answer

The Answer of The Outlet has an unlevered cost of capital of 15.1 percent,a tax rate of 34 percent,and expected earnings before interest and taxes of $26,100.The company has $25,000 in bonds outstanding that have a coupon rate of 7.6 percent.The bonds are selling at par.What is the cost of equity?
A)14.31%
B)15.08%
C)16.59%
D)14.64%
E)16.37%

The Outlet Has an Unlevered Cost of Capital of 15