Use the Information for the Question(s)below

question 13

Multiple Choice

Use the information for the question(s) below.
KT Enterprises is considering undertaking a new project.Based upon analysis of firms with similar projects,KT has determined that an unlevered cost of equity of 12% is suitable for their project.KT's marginal tax rate is 35%,its borrowing rate is 7%,and KT does not believe that its borrowing rate will change if the new project is accepted.
-If KT expects to maintain a debt to equity ratio for this project of 1,then KT's equity cost of capital,r_E,for this project is closest to:

• A)17.0%
• B)5.0%
• C)15.0%
• D)12%

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Definitions:

Deplorable Conditions

Extremely poor and unacceptable working or living conditions that can be hazardous to health and well-being.

National War Labor Board

A US government agency established during World War II to arbitrate labor disputes, manage wage controls, and ensure the production of goods for the war effort.

Tripartite Board

A governing or advisory board composed of representatives from three distinct groups, often referring to government, employers, and labor unions.

Labor Disputes

Conflicts between employees and employers regarding working conditions, wages, contracts, and other employment issues.