Question: Perry plc has 30% debt in its capital structure. The debt is risk-free, and the beta of equity of Perry is 1.5. The cost of

Perry plc has 30% debt in its capital structure. The debt is risk-free, and the beta of equity of Perry is 1.5. The cost of equity for Perry is 16% and the corporate tax rate is 20%. Delta plc is an identical company to Perry plc in every way except their capital structure. It has an equity value of 40 million and debt with a market value of 20 million. The debt of Delta is also risk-free. If the market risk premium is 8%, what is the required return on Deltas equity? Select one: a. None of these answers is correct. b. 15.2% c. 16.5% d. 12.9% e. 17.5%

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