What is the pretax cost of debt-chairs-r-us

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Chairs-R-Us has a cost of equity of 13.56 percent and an unlevered cost of capital of 11.43 percent. The company has $40,000 in debt that is selling at par value. The levered value of the company is $81,000 and the tax rate is 25 percent. What is the pretax cost of debt?

Reference no: EM132467078

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