74. A twenty-year $1,000 fixed rate non-callable bond with 8% annual coupons currently sells for
$1,105.94. Assuming a 30% marginal tax rate and an additional risk premium for equity relative
to debt of 5%, the cost of equity using the bond-yield-plus-risk-premium approach is closest to:
A. 9.9%.
B. 12.0%.
C. 13.0%.
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