Unlevered cost of capital

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Reference no: EM13875409

Johnson Tire Distributors has an unlevered cost of capital of 11 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of $1,600. The company has $2,900 in bonds outstanding that have an 8 percent coupon and pay interest annually. The bonds are selling at par value. What is the cost of equity?

Reference no: EM13875409

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