Exhibit 17.1
Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.
-Refer to Exhibit 17.1.What is the firm's cost of equity?

Question

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The Answer of Exhibit 17.1
Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.
-Refer to Exhibit 17.1.What is the firm's cost of equity?

Exhibit 17.1 Eccles Inc., a Zero Growth Firm, Has an Expected EBIT