A Newly Appointed CFO of a Company Tells You That

A newly appointed CFO of a company tells you that he needs to determine the required return on unlevered equity should his firm completely deliver.He further tells you that the required return on assets is 10% and that his cost of debt is 3% based upon a current borrowed amount of $50,000,000 but he doesn't know the market value of his equity.What is the required return on equity should his firm eliminate all of its debt?

A) 10.0%
B) 11.5%
C) 13.0%
D) it is impossible to tell