Hi please help with a practice problem of mine.
Mystic Owl Consulting has a cost of equity of 15.3 percent and an unlevered cost of capital of 11.8 percent. The company has $22,000 in debt that is selling at par value. The levered value of the firm is $41,000. Assume zero tax rate and no default risk. What is the cost of debt? a. 8.8 percent b. 11.8 percent c. 15.3 percent d. 13.5 percent e. 27.1 percent