The Border Cafe Has a Cost of Equity of 13

question 36

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 .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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