Required return on assets and pre-tax cost of debt

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Winter's Toyland has a debt-equity ratio of 0.72. The pre-tax cost of debt is 8.7 percent and the required return on assets is 16.1 percent. What is the cost of equity if you ignore taxes?

HINT: Review M&M Proposition I & II

19.31 percent

19.74 percent

20.29 percent

20.46 percent

21.43 percent

Reference no: EM13811785

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