SIROM Scientific Solutions Has $10 Million of Outstanding Equity and $10

question 16

Multiple Choice

SIROM Scientific Solutions has $10 million of outstanding equity and $10 million of bank debt.The bank debt costs 7% per year.The estimated equity beta is 2.If the market risk premium is 6% and the risk-free rate is 5%,compute the weighted average cost of capital if the firm's tax rate is 30%.

• A)9.56%
• B)10.21%
• C)10.95%
• D)11.45%

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