turer in the world, reported earnings before interest and 20. In 1995, Cooper Tire, the ninth largest tire manufac- taxes of $175 million. It had a book value of equity of $750 million (market value of equity was $2.4 billion) and debt outstanding of $38 million in 1995. The beta for the stock was 1.25, while the pre-tax cost of debt was 8%. Evaluate whether the returns Cooper made on its projects earned surplus returns during 1995, Refer to Chapter 15, Problem 20. Assume a tax rate of 36%, a T-Bond rate of 7%, and a market risk premium of 5.5%. The cost of capital is 13.88%. This statement is: True False