Question 6

"Faststone Industries has an expected EBIT of $1,000,000, a cost of equity of 15% and a cost of debt of 8%. Faststone s debt-to-equity ratio is 0.3. The corporate tax rate is 40%. What is the appropriate discount rate if you are using the FTE method to value Faststone?"

		7.2%
		13.9%
		12.6%
		10.2%
		15.0%