Champion Contractors had earnings before interest of $3,500,000 for its most recent year-end.Total debt amounted to $5,000,000 and total stockholders' equity was $20,000,000.The debt carried an interest rate of 7%,while stockholders were demanding an 15% rate of return.Ignoring income taxes,determine the firm's cost of capital.

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The Answer of Champion Contractors had earnings before interest of $3,500,000 for its most recent year-end.Total debt amounted to $5,000,000 and total stockholders' equity was $20,000,000.The debt carried an interest rate of 7%,while stockholders were demanding an 15% rate of return.Ignoring income taxes,determine the firm's cost of capital.

Champion Contractors Had Earnings Before Interest of $3,500,000 for Its