The market value of Charcoal Corporation's common stock is $20 million, and the market value of its risk-free debt is $5 million. The beta of the company's common stock is 1.25, and the market risk premium is 8%. If the Treasury bill rate is 5%, what is the company's cost of capital? (Assume no taxes.)
A) 15%
B) 14.6%
C) 13%
D) None of the above

Question

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The Answer of The market value of Charcoal Corporation's common stock is $20 million, and the market value of its risk-free debt is $5 million. The beta of the company's common stock is 1.25, and the market risk premium is 8%. If the Treasury bill rate is 5%, what is the company's cost of capital? (Assume no taxes.)
A) 15%
B) 14.6%
C) 13%
D) None of the above

The Market Value of Charcoal Corporation's Common Stock Is $20