A firm has a debt-to-value ratio of 1/3. It has only debt and equity in its...

A firm has a debt-to-value ratio of 1/3. It has only debt and equity in its capital structure. Its before tax cost of debt is 9% and the after tax weighted average cost of capital (WACCAT) is 12%. What is the firm’s cost of equity if the tax rate for the firm is 35%?

16.050%

15.075%

none of these

18.000%

9.000%

Expert Solution

jeff jeffy answered 2 years ago

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