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

question 25

Multiple Choice

Jemisen's has expected earnings before interest and taxes of $6,200. Its unlevered cost of capital is 13 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)12.66 percent
• C)13.87 percent
• D)14.14 percent
• E)14.37 percent

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