Nexum Inc. has a target debt-equity ratio of 1.25. Its WACC is 9.2%, and the tax rate is 35%. If Nexum's cost of equity is 14%, what is its pre-tax cost of debt?
A) 6.45%
B) 7.35%
C) 8.25%
D) 9.15%
E) 10.05%
Correct Answer:
Verified
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