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11. Compton Corporation currently has no debt in its capital structure. As an unlevered firm, its cost of equity is 10 percent. It is considering

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11. Compton Corporation currently has no debt in its capital structure. As an unlevered firm, its cost of equity is 10 percent. It is considering substituting $40,000 in debt at 4 percent interest. The EBIT for the firm is $15,000 under either scenario, and the tax rate is 35 percent. According to M&M with taxes, what is the debt/equity ratio for the levered firm? a. .24 O b..32 O c..41 O d..56

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