Question
Eccles Inc., a zero growth firm, has an expected EBIT of $140,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt,
Eccles Inc., a zero growth firm, has an expected EBIT of $140,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.
What is the firm's cost of equity according to MM with corporate taxes?
Post your solution here: _______%
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Personal Finance
Authors: Jack Kapoor, Les R. Dlabay, Robert J. Hughes
2nd Edition
0256079056, 9780256079050
