Question: A is a food processing company that generated $80m in operating income last year. It has $300m in bank loans with an average book interest

A is a food processing company that generated $80m in operating income last year. It has $300m in bank loans with an average book interest rate of $15m. T. If the risk-free rate is 3% and A has 100m shares outstanding at $15 per share, what is the pre- tax cost of debt? a) 4.00% b) 4.30% c) 5.00% d) 6.30% e) None of the above.

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