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What will be the firm levered cost of equity

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Problem 1: An all-equity firm has a cost of capital of 13.3 percent. The firm is considering switching to a debt-equity ratio of .35 with a pretax cost of debt of 7.5 percent. The tax rate is 35 percent. What will be the firm's levered cost of equity if they make this switch?

A. 15.25%

B. 14.21%

C. 16.07%

D. 14.62%

E. 15.38%

Reference no: EM132962576

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