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Eccles Incorporated, a zero growth firm, has an expected EBIT of $100,000 and a corporate tax...

Eccles Incorporated, a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 25%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.

Refer to the data for Eccles Incorporated.What is the firm's cost of equity according to MM with corporate taxes?

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