A firm uses only debt and equity in its capital structure. The firm's weight of debt is 40%. The firm could issue new bonds at a yield to maturity of 9% and the firm has a tax rate of 30%. If the firm's WACC is 11%, what is the firm's cost of equity?
A) 15.92%
B) 14.13%
C) 15.03%
D) 15.68%
Correct Answer:
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