D Question 4 Appliances, Inc. has no debt outstanding, and its financial position is given by the following data Assets (market value-book value) $5,000,000 EBIT $800,000 Cost of equity 12% Stock price $10 Shares outstanding 500.000 Tax rate 25% The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 20% debt based on market values, its cost of equity will increase to 13% to reflect the increased risk. Bonds can be sold at a cost of 6%. Appliance, Inc. is a no-growth firm. Hence, all its earnings are paid out as dividends. Earnings are expected to be constant over time. As a creditor, you are concerned about the company's ability to repay its debt and interest. What is the new times interest carned 12.244 11.58 12.56% w