The following data applies to LeVeit Company: LeVit has a target debt-equity ratio of 0.5. LeVits bonds are currently yielding at 10%. LeVit is a constant growth (5%) firm that just paid a dividend of $3.00. LeVits stock sells for $31.50 per share. The companys marginal tax rate is 40%. If the company has a debt-to-equity ratio of 0.5, it will have $0.50 in debt for each $1.00 in equity. V= debt + equity = 0.5+1 = $1.5.

19. The after tax cost of debt is equal to: *

A. 15%

B. 5%

C. 6%

D. 10%

E. None of the above

20. The cost of equity (rs) is equal to: *

A. 15%

B. 5%

C. 6%

D. 10%

E. None of the above

21. The companys weighted average cost of capital is closest to: *

A. 10.5%

B. 11.0%

C. 12.0%

D. None of the above