The market value of Cable Company's equity is $60 million, and the market value of its risk-free debt is $40 million. If the required rate of return on the equity is 15% and that on the debt is 5%, calculate the company's cost of capital. (Assume no taxes.)
A) 15%
B) 10%
C) 11%
D) None of the above
Correct Answer:
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A)
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