Johnson Tire Distributors has an unlevered cost of capital of 13 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of $1,800. The company has $3,200 in bonds outstanding that have an 8 percent coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?

Answer rating: 100% (QA)

Calculate the value of the unlevered firm V unlevered firm EBIT1Tax rateR unlevered cost of e... View the full answer