Question: Right now, PP Co. has a capital structure that consists of 20 percent debt and 80 percent equity, based on market values. The risk-free rate

Right now, PP Co. has a capital structure that consists of 20 percent debt and 80 percent equity, based on market values. The risk-free rate is 6 percent and the market risk premium is 5 percent. The company can borrow at risk-free rate. Currently the company's cost of equity, which is based on the CAPM, is 12 percent and its tax rate is 40 percent. What is PP Co's unlevered cost of equity capital? 11.22% 14.23% 14.65% 13.7% 10.8%

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