Affinity has a cost of equity of 15.4 percent and an unlevered cost of capital of 13.2

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Affinity has a cost of equity of 15.4 percent and an unlevered cost of capital of 13.2 percent. The company has $24,000 in debt that is selling at par value. The levered value of the firm is $59,000 and the tax rate is 34 percent. What is the pretax cost of debt?

A. 8.34%

B. 7.38%

C. 8.75%

D. 9.69%

E. 9.20%

Posted Date: May 18, 2024 04:02 PM

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Affinity has a cost of equity of 15.4 percent and an unlevered cost of capital of 13.2

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