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%

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Definitions:

Goal Accomplishment

Goal accomplishment refers to the successful achievement of objectives through planned strategies, effort, and resource allocation.

Conditioned Stimulus

A previously neutral stimulus that, after being associated with an unconditioned stimulus, triggers a conditioned response.

Presbyterian Hospital

A healthcare institution affiliated with the Presbyterian denomination or potentially part of a network named for its historical religious affiliation.

Mistrust

Lack of trust or confidence in someone or something.