The Border Cafe Has a Cost of Equity of 13

question 16

Multiple Choice

The Border Cafe has a cost of equity of 13.2 percent and a pretax cost of debt of 7.5 percent.The debt-equity ratio is 0.6 and the tax rate is 35 percent.What is the unlevered cost of capital?

• A)11.60%
• B)12.30%
• C)11.97%
• D)12.08%
• E)10.80%

---

Definitions:

Antidiarrheal Medications

Drugs used to alleviate or prevent diarrhea.

Acute Diarrhea

A sudden onset of frequent, loose, or watery bowel movements that may last a few days and can lead to dehydration.

Rotavirus

A highly contagious virus that causes gastroenteritis, particularly in infants and young children, leading to severe diarrhea and vomiting.

Hirschsprung Disease

A congenital condition affecting the large intestine's nerve cells, causing difficulty with bowel movements.