The Pizza Palace Has a Cost of Equity of 15

question 59

Multiple Choice

The Pizza Palace has a cost of equity of 15.3 percent and an unlevered cost of capital of 11.8 percent.The company has $22,000 in debt that is selling at par value.The levered value of the firm is $41,000 and the tax rate is 34 percent.What is the pre-tax cost of debt?

• A)4.73 percent
• B)6.18 percent
• C)6.59 percent
• D)7.22 percent
• E)9.92 percent

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Definitions:

Social Networks

Platforms or structures made up of individuals or organizations interconnected through various social relationships, such as friendship, kinship, common interests, or shared knowledge.

Agoraphobia

Fear of open, crowded places.

Irrational Fear

A fear that is disproportionate to the actual level of threat or danger presented by the object or situation.

Social Networks

The complex web of relationships and interactions among individuals, groups, or digital platforms, which can facilitate the sharing of information and influence social behavior and attitudes.