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OPW plc. has a cost of equity of 14.4 percent and an unlevered cost of capital of 13 percent. The company has 20,000 in debt
OPW plc. has a cost of equity of 14.4 percent and an unlevered cost of capital of 13 percent. The company has 20,000 in debt that is selling at par value. The levered value of the firm is 46,000 and the tax rate is 35 percent. What is the pretax cost of debt?
A. 11.75%
B. 10.20%
C. 9.38%
D. Cannot be determined
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