The pretax cost of debt is 86 percent ignoring taxes what, Financial Management

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The pretax cost of debt is 86 percent ignoring taxes what

An all-equity firm has a return on assets of 13.3 percent. The firm is considering converting to a debt-equity ratio of .48. The pretax cost of debt is 8.6 percent. Ignoring taxes, what will the cost of equity be if the firm switches to the levered capital structure?

A. 16.01 percent

B. 15.28 percent

C. 16.60 percent

D. 17.03 percent

E. 15.56 percent

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Financial Management: The pretax cost of debt is 86 percent ignoring taxes what

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