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Compute the June 20xx Cost of Capital (Rounded to Nearest

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Compute the June 20xx cost of capital (rounded to nearest percent) for an investment center with the following information:  Pre-tax operating income for June 20xx $17,500,000 Assets at June 30, 20xx 6,200,000 Current liabilities at June 30, 20xx 4,000,000 Long-term liabilities at June 30, 20xx 1,500,000 Income tax expense for June 30,20xx 5,000,000 EVA 11,940,000\begin{array}{lr}\text { Pre-tax operating income for June 20xx } & \$ 17,500,000 \\\text { Assets at June 30, 20xx } & 6,200,000 \\\text { Current liabilities at June 30, 20xx } & 4,000,000 \\\text { Long-term liabilities at June 30, 20xx } & 1,500,000 \\\text { Income tax expense for June 30,20xx } & 5,000,000 \\\text { EVA } & 11,940,000\end{array}

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Definitions:

Lease Payment

Regular payments made by a lessee to a lessor for the use of a leased asset, typically property or equipment.

Compounded Annually

Interest or returns on an investment are calculated once per year and added to the principal amount.

Annual Payment

A payment made once a year for a particular commitment or service.

Accumulated Capital

The total value of all capital assets owned by an entity after depreciation and amortization.

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