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Assume the assumptions underlying the APV are relevant. Brakes and Rakes Co. (BRR) has required return on levered equity equal to 20%, required return on debt of 9%, and corporate tax rate of 25%. The required return on the market is 15%. BRR has debt with market value $30 million and equity with market value $6 million. What is BRR's unlevered cost of capital?

a. 10.26%

b. 10.83%

c. 11.32%

d. 12.71%

e. 13.89%

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M941591

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