Johnson Tire Distributors has an unlevered cost of capital of 12 percent, a tax rate of 33 percent, and expected earnings before interest and taxes of $2,000. The company has $3,800 in bonds outstanding that have a 8 percent coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity? A stock has returns of 3%, 18%, -24%, and 16% for the past four years. Based on this information, what is the 95% probability range for any one given year?                

Answer rating: 100% (QA)

V U Value of an unlevered firm V L Value of levered firm B ... View the full answer