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NARRBEGIN: Never-Crash Airlines Never-Crash Airline

Question 12

Multiple Choice

NARRBEGIN: Never-crash Airlines
Never-crash Airline
Never-crash Airline has a capital structure that consists of 30% debt and 70% equity. The company’s cost of debt is 7%. The company has a beta of 1.9. The risk free rate equals 4.5% and the expected return on the market portfolio is 15%.
NARREND

-What is the Never-crash Airline's after tax cost of debt?


A) 7.00%
B) 4.62%
C) 2.38%
D) 4.50%

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