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25. XYZ Co. has an unlevered cost of capital of 16%, a tax rate of 20% percent, and expected earnings before interest and taxes of
25. XYZ Co. has an unlevered cost of capital of 16%, a tax rate of 20% percent, and expected earnings before interest and taxes of $1,000,000 (in perpetuity). The company has outstanding bonds with a market value of $20 million, and a yield of 7%. What is the cost of equity? A. 18.61% B. 21.44% C. 30.04% D. 20.80% E. none of the above
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