Your firm has expected earnings before interest and taxes of $2,400. Your unlevered cost of capital is 12% and your tax rate is 35%. You have debt with both a book and a market value of $5,000. This debt has a 7% coupon and pays interest annually. What is your weighted average cost of capital?
A) 10.02%
B) 10.21%
C) 10.32%
D) 10.58%
E) 11.23%

Question

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The Answer of Your firm has expected earnings before interest and taxes of $2,400. Your unlevered cost of capital is 12% and your tax rate is 35%. You have debt with both a book and a market value of $5,000. This debt has a 7% coupon and pays interest annually. What is your weighted average cost of capital?
A) 10.02%
B) 10.21%
C) 10.32%
D) 10.58%
E) 11.23%

Your Firm Has Expected Earnings Before Interest and Taxes of $2,400