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The Backwoods Lumber Co. has a debt-equity ratio of 0.8. The firm's required return on assets is 12% and its cost of equity is 17%.

The Backwoods Lumber Co. has a debt-equity ratio of 0.8. The firm's required return on assets is 12% and its cost of equity is 17%.

What is the pre-tax cost of debt based on MM Proposition II with no taxes?

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