Jemisen's Has Expected Earnings Before Interest and Taxes of $6,200

question 61

Multiple Choice

Jemisen's has expected earnings before interest and taxes of $6,200.Its unlevered cost of capital is 14 percent and its tax rate is 34 percent.The firm has debt with both a book and a face value of $2,500.This debt has a 9 percent coupon and pays interest annually.What is the firm's weighted average cost of capital?

• A)12.48 percent
• B)13.60 percent
• C)13.87 percent
• D)14.14 percent
• E)14.37 percent

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