What is the pretax cost of debt

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DL Trucking has a cost of equity of 14.4 percent and an unlevered cost of capital of 13 percent. The company has $20,000 in debt that is selling at par value. The levered value of the firm is $46,000 and the tax rate is 35 percent. What is the pretax cost of debt?

  • 11.75%
  • 10.20%
  • 9.38%
  • 11.20%
  • 12.35%

Reference no: EM131429107

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