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What is the cost of equity of johnson tire distributors

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Johnson Tire Distributors has an unlevered cost of capital of 10 percent, a tax rate of 35 percent, and expected earnings before interest and taxes of $1,800. The company has $3,600 in bonds outstanding that have an 8 percent coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?

Reference no: EM132412280

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