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12. Down Bedding has an unlevered cost of capital of 14 percent, a cost of debt of 7.8 percent, and a tax rate of 32
12. Down Bedding has an unlevered cost of capital of 14 percent, a cost of debt of 7.8 percent, and a tax rate of 32 percent. What is the target debt-equity ratio if the targeted cost of equity is 15.51 percent? A. 24 B. .29 C. .36 D. .52 13. Douglass & Frank has a debt-equity ratio of 0.35. The pre-tax cost of debt is 8.2 percent while the unlevered cost of capital is 13.3 percent. What is the cost of equity if the tax rate is 39 percent? A. 13.79 percent B. 14.39 percent C. 14.86 percent D. 18.40 percent 14. D. L. Tuckers has $21,000 of debt outstanding with a cost of debt 7.5 percent. The tax rate is 32 percent. What is the present value of the tax shield? A. $504 B. $615 C. $644 D. $6,720
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