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

question 60

Multiple Choice

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

• A) 10 percent
• B) 25 percent
• C) 13 percent
• D) 17 percent

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