13 Note: this data will be used for the three questions

4%

. The marginal tax rate is

40%

.\ What is the company's cost of equity?\

18.0%

\

14.0%

\

10.8%

\

14.2%

Note: this data will be used for the three questions Currently, a company is financed with 40% equity and 60% debt. The debt consists of 15 -year $1,000 face-value bonds that pay semi-annual interest payments based on an annual coupon rate of 7%. The market price of the firm's bonds is currently $1034. Further, the company has a beta of 1.4 . The expected return on the market is expected to be 14% while the risk free rate is 4%. The marginal tax rate is 40%. What is the company's cost of equity? 18.0% 14.0% 10.8% 14.2%