Al's Pub has debt with both a book and a market value of $120,000. This debt has a coupon rate of 9% and pays interest annually. The expected earnings before interest and taxes are $42,600, the tax rate is 34%, and the unlevered cost of capital is 11%. What is the firm's cost of equity?

A 12.18%

B 12.15%

C 12.07%

D 11.90%

E 12.11%

Answer rating: 100% (QA)

Answer is 1190 Value of Unlevered Firm EBIT 1 Tax Rate Unlevered Cost of Equi... View the full answer