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A firm has 8 0 bonds outstanding that are selling at their par value of Rs . 1 , 0 0 0 each. Bonds with

A firm has 80 bonds outstanding that are selling at their par value of Rs.1,000 each. Bonds with similar characteristics are yielding a pretax 8.6 percent. The firm also has 4,000 shares of equity stock outstanding. The stock has a beta of 1.1 and sells for Rs.40 a share. The RBI 10 year T-bill is yielding 4 percent, the market risk premium is 8 percent, and the firm's tax rate is 21 percent. What is the firm's weighted average cost of capital?

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