The Outlet Has an Unlevered Cost of Capital of 15

question 27

Multiple Choice

The Outlet has an unlevered cost of capital of 15.1 percent,a tax rate of 34 percent,and expected earnings before interest and taxes of $26,100.The company has $25,000 in bonds outstanding that have a coupon rate of 7.6 percent.The bonds are selling at par.What is the cost of equity?

• A)14.31%
• B)15.08%
• C)16.59%
• D)14.64%
• E)16.37%

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Definitions:

Corporate Ethics

The moral principles and standards that guide behavior within the business world.

Organizational Ethics Codes

A set of guiding principles and standards adopted by an organization to ensure its actions and decisions align with ethical and moral expectations.

Personal Ethics Codes

Individual principles or values that guide a person's behavior and decision-making process.

Core Values

Fundamental beliefs or guiding principles that dictate behavior and action for individuals or organizations.