Brr Unlevered Cost Of Capital 541591

Assume the assumptions underlying the APV are relevant. Brakes and Rakes Co. (BRR) has required return on levered equity equal to 20%, required return on debt of 9%, and corporate tax rate of 25%. The required return on the market is 15%. BRR has debt with market value $30 million and equity with market value $6 million. What is BRR’s unlevered cost of capital?

a.10.26%

b.10.83%

c.11.32%

d.12.71%

e.13.89%