2. Weighted Average cost of Capital An entrepreneur has an idea for a new company, and you are helping her to estimate the cost of capital for this new company. You have identified a publicly-traded company in a similar line of business, and have gathered the following data on this company : Long-term debt outstanding $200 million Coupon rate of debt 5.00% Market yield of debt 8.00% Number of shares of common stock outstanding 40 million Book value per share $10.00 Market price per share $20.00 Equity beta 0.65 Assume perfect markets. The risk-free rate of interest is 2%, and the expected return on the market portfolio is 8%. What is the estimated cost of capital for the new company