Multiple Choice
SIROM Scientific Solutions has $5 million of outstanding equity and $5 million of bank debt. The bank debt costs 4% per year. The estimated equity beta is 2. If the market risk premium is 8% and the risk-free rate is 4%, compute the weighted average cost of capital if the firm's tax rate is 35%.
A) 11.87%
B) 12.43%
C) 11.30%
D) 13.00%
Correct Answer:
Verified
Correct Answer:
Verified
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