Toronto Skaters Company has a D/E ratio of 1.5.The company has 1,000 shares outstanding and a beta of 1.2.The risk-free rate is 3 percent and the market risk premium is 5 percent.The company has 10-year debt with a face value of $1 million and annual coupons of 4 percent.The debt is currently trading at 105.The tax rate is 35 percent.Calculate the weighted average cost of capital for Toronto Skaters Company.
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