Question
A firm has $100 million in debt, $300 million in equity, and an effective tax rate of 40%. If the firm's cost of capital is
A firm has $100 million in debt, $300 million in equity, and an effective tax rate of 40%. If the firm's cost of capital is 8% and the pre-tax cost of debt is 5%, what is the cost of equity? (round to one decimal)
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Survey of Accounting
Authors: Edmonds, old, Mcnair, Tsay
2nd edition
9780077392659, 978-0-07-73417, 77392655, 0-07-734177-5, 73379557, 978-0073379555
