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20. 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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20. 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. What is the cost of equity for the levered firm (rounded 2 decimals)? a. 11 % O b. 12 % C. 14 % d. 15%

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