The Corner Bakery has a debt-equity ratio of 0.62.The firm's required return on assets is 14.2 percent and its cost of equity is 16.1 percent.What is the pre-tax cost of debt based on M & M Proposition II with no taxes?
A) 7.10 percent
B) 10.68 percent
C) 11.14 percent
D) 17.56 percent
E) 18.40 percent
Correct Answer:
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