Douglass & Frank has a debt-equity ratio of 0.45. The pre-tax cost of debt is 7.6 percent while the unlevered cost of capital is 13.3 percent. What is the cost of equity if the tax rate is 39 percent?
A) 13.79 percent
B) 14.86 percent
C) 15.92 percent
D) 18.40 percent
E) 18.87 percent
Correct Answer:
Verified
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