Eccles Inc

question 83

Multiple Choice

Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.
-Refer to the data for Eccles Inc.What is the firm's cost of equity according to MM with corporate taxes?

• A) 21.0%
• B) 23.3%
• C) 25.9%
• D) 28.8%
• E) 32.0%

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