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Problem 20 A firm's return on assets is 12% and the cost of the firm's debt is 7%. Given a 0.7 debt to equity ratio,

Problem 20

A firm's return on assets is 12% and the cost of the firm's debt is 7%. Given a 0.7 debt to equity ratio, what is the levered cost of equity?

A. 7.0% B. 12.0% C. 13.6% D. 15.5%

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