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Elyas Fermandopulous is a top equity analyst working for a large bank in the United States. He is analyzing Kantak Iron Inc. (KI), a company
Elyas Fermandopulous is a top equity analyst working for a large bank in the United States. He is analyzing Kantak Iron Inc. (KI), a company that sells irons and headquartered in Bloomington, Indiana. He is worried that KI's credit standing is deteriorating, and he needs to estimate its cost of debt (i.e. Interest rate). He gathers the following information: Net Income = 100 Shareholders' Equity = 800 Debt = 1000 ROA = 15% Tax Rate = 20% What is Fermandopulous' estimate of KI's cost of debt?
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