Backwoods Lumber AB has a debt-equity ratio of .80.The ﬁrm's required return on assets is 12% and its cost of equity is 15.68%.What is the pre-tax cost of debt based on MM Proposition II with no taxes?
A)6.76%
B)7.00%
C)7.25%
D)7.40%
E)7.50%

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The Answer of Backwoods Lumber AB has a debt-equity ratio of .80.The ﬁrm's required return on assets is 12% and its cost of equity is 15.68%.What is the pre-tax cost of debt based on MM Proposition II with no taxes?
A)6.76%
B)7.00%
C)7.25%
D)7.40%
E)7.50%

Backwoods Lumber AB Has a Debt-Equity Ratio of