Eccles Inc. Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and...
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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%.
Refer to the data for Eccles Inc.What is the firm's cost of equity according to MM with corporate taxes?
| a. | 23.3% | |
| b. | 32.0% | |
| c. | 25.9% | |
| d. | 21.0% | |
| e. | 28.8% |
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