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    Cost of equity

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    A firm has a debt-to-equity ratio of 1.20. If it had no debt, its cost of equity would be 15%. Its cost of debt is 10%. What is its cost of equity if there are no taxes or other imperfections?

    a. 10%
    b. 15%
    c. 18%
    d. 21%
    e. none of the above

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    We have to calculate the levered cost of equity given the unlevered cost of ...

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    The solution explains how to calculate the cost of equity