The firm's tax rate is 34%. The firm's pre-tax cost of debt is 8%; the firm's debt-to-equity ratio is 4; the risk-free rate is 3%; the beta of the firm's common stock is 1.5; the market risk premium is 9%. What is the firm's cost of equity capital?
A) 33.33%
B) 10.85%
C) 13.12%
D) 16.50%
E) None of the above
Correct Answer:
Verified
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