QUESTION 4

The Backwoods Lumber Co. has a debt-equity ratio of 80. The firm's unlevered cost of equity capital is 10% and its levered cost of equity is 15.68%. What is the cost of debt based on MM Proposition II with no taxes? O 6.76% 3.50% 2.9% 7.40% 7.50%

The Backwoods Lumber Co. has a debt-equity ratio of .80 . The firm's unlevered cost of equity capital is 10% and its levered cost of equity is 15.68%. What is the cost of debt based on MM Proposition II with no taxes? 6.76% 3.50% 2.9% 7.40% 7.50%