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What is the firm cost of equity according to mm

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Reference no: EM132613771

Eccles Inc.

Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.

Problem 1: Refer to the data for Eccles Inc. What is the firm's cost of equity according to MM with corporate taxes?

Option a. 21.0%

Option b. 23.3%

Option c. 32.0%

Option d. 25.9%

Option e. 28.8%

Reference no: EM132613771

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