Question: Peter Berk Inc. currently has no debt and a required rate of return on capital of 15%. Peter is considering the addition of debt to

Peter Berk Inc. currently has no debt and a required rate of return on capital of 15%. Peter is considering the addition of debt to its capital structure at a cost of 8%. It will use the proceeds to repurchase equity until the firm achieves a 40% holding of debt and a 60% holding of equity. What is the firm's levered cost of equity? A. 11.41% B. 19.67% C. 22.17% D. None of the above

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