Anderson's Furniture Outlet has an unlevered cost of capital of 10%, a tax rate of 34%,...

Anderson's Furniture Outlet has an unlevered cost of capital of 10%, a tax rate of 34%, and expected earnings before interest and taxes of $1,600. The company has $3,000 in bonds outstanding that have an 8% coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?

	a.	8.67%
	b.	10.46%
	c.	9.72%
	d.	9.34%
	e.	9.99%

Expert Solution

jeff jeffy answered 8 months ago

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