Black Inc
Subject:MathPrice: Bought3
Black Inc. is a manufacturing company with a cost of debt of 6.5%. The company is financed equally by equity and debt and is subject to a tax rate of 20%. An analyst investigating the optimal capital structure for the firm has estimated that the cost of equity of the company if it had no debt would be 8%. According to Modigliani and Miller proposition II with taxes, the cost of equity of the company is closest to: a) 6.6%. b} 7.3%. c} 9.2%.
