Anderson's Furniture Outlet has an unlevered cost of capital of 10.3 percent,a tax rate of 21 percent,and expected earnings before interest and taxes of $1,900.The company has $4,000 in bonds outstanding that have an annual coupon of 7 percent.If the bonds are selling at par,what is the cost of equity?
A)11.33 percent
B)9.34 percent
C)10.72 percent
D)9.99 percent
E)11.21 percent

Question

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The Answer of Anderson's Furniture Outlet has an unlevered cost of capital of 10.3 percent,a tax rate of 21 percent,and expected earnings before interest and taxes of $1,900.The company has $4,000 in bonds outstanding that have an annual coupon of 7 percent.If the bonds are selling at par,what is the cost of equity?
A)11.33 percent
B)9.34 percent
C)10.72 percent
D)9.99 percent
E)11.21 percent

Anderson's Furniture Outlet Has an Unlevered Cost of Capital of 10.3