Jamison's Has Expected Earnings Before Interest and Taxes of $11,900

question 32

Multiple Choice

Jamison's has expected earnings before interest and taxes of $11,900. Its unlevered cost of capital is 12.8 percent and its tax rate is 21 percent. The company has debt with both a book and a face value of $12,500. This debt has a coupon rate of 7.6 percent and pays interest annually. What is the weighted average cost of capital?

• A) 12.48 percent
• B) 12.36 percent
• C) 12.87 percent
• D) 11.38 percent
• E) 12.09 percent