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Luther Industries has 2 5 million shares outstanding trading at $ 1 8 per share. In addition, Luther has $ 1 5 0 million in

Luther Industries has

25

million shares outstanding trading at $

18

per share. In

addition, Luther has $

150

million in outstanding debt. Suppose Luther's equity cost

of capital is

13 %,

its debt cost of capital is

7 %,

and the corporate tax rate is

21 % .

What is Luther's unlevered cost of capital?

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