In: Finance
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% |