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Pizza Palace has a cost of equity of 1 5 . 3 percent and an unlevered cost of capital of 1 1 . 8 percent.

Pizza Palace has a cost of equity of 15.3 percent and an unlevered cost of capital of 11.8 percent. The company has $22,000 in debt that is selling at par value. The levered value of the firm is $41,000. Assume zero tax rate and no default. What is the cost of debt?

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