Use the Following Information to Answer the Question(s)below

question 91

Multiple Choice

Use the following information to answer the question(s) below.
Luther Industries has 25 million shares outstanding trading at $18 per share.In addition,Luther has $150 million in outstanding debt.Suppose Luther's equity cost of capital is 13%,its debt cost of capital is 7%,and the corporate tax rate is 21%.
-Luther's after-tax debt cost of capital is closest to:

• A)4.2%.
• B)5.5%.
• C)7.0%.
• D)9.8%.

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Definitions:

Monkey

A primate belonging to the group that typically has a tail and is smaller than an ape, often noted for high intelligence and agile movements.

Phobia

An extreme or irrational fear or aversion to something, often resulting in avoidance behavior and distress.

Systematic Desensitization

A therapeutic technique used to help individuals overcome phobias and anxiety, involving gradual exposure to the feared object or situation.

Phobia Development

The process through which an irrational and intense fear of a specific object, scenario, or activity is formed, often resulting from a negative experience or predisposition.