Louisiana State University, Shreveport FIN FIN 701 Hi There, could you please help me explaining how to resolve this problems. thank you! Company Inc. has debt with both a face and a market value of
Charles’ Distributors have a cost of equity of 13.84% and an unlevered cost of capital of 12%. The company has $5,000 in debt that is selling at par value. The levered value of the firm is $12,000 and the tax rate is 34%. What is the pre-tax cost of debt?
a. 7.92% b. 8.10% c. 8.16% d. 8.84% e. 9.00%
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