Question: Spears plc has 1/3 debt in its capital structure. Its cost of equity is 22%, and its cost of debt is 16%. If the corporate

Spears plc has 1/3 debt in its capital structure. Its cost of equity is 22%, and its cost of debt is 16%. If the corporate tax

rate is 40%, what would its cost of equity be if the company had no debt in its capital structure?

Select one:

a. 14.0%

b. None of these answers is correct.

c. 20.6%

d. 22.0%

e. 21.0%

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