Problem:
Alabaster Incorporated has an equtiy cost of capital of 14%. The debt to value ratio is .6, the tax rate is 35%, and the cost of debt is 8%.
Requirement:
Question: What is the cost of equity if Alabaster was unlevered?
A) 9.05%,
B) 10.55%,
C) 11.03%,
D) 12.55%,
E) None of these.