8. Consider a company that has equity = 1.5 and debt = 0.4. Suppose that the risk-free...

8. Consider a company that has βequity = 1.5 and βdebt = 0.4. Suppose that the risk-free rate of interest is 6 percent, the expected return on the market E(rm) is 15 percent and the corporate tax rate is 40 percent. If the company has 40 percent equity and 60 percent debt in its capital structure, calculate its weighted average cost of capital using both the classic CAPM and the Benninga-Sarig tax-adjusted CAPM.