Biogen Inc. currently has a capital structure of 50 percent debt and 50 percent equity, but is considering a new product that will be produced and marketed by a separate division. The new division will have a capital structure of 65 percent debt and 35 percent equity. Biogen has a current beta of 1.5, but is not sure what the beta for the new division will be. Celgene Corporation is a firm that produces a product similar to the product under consideration by Biogen. Celgene has a beta of 1.8, a capital structure of 35 percent debt and 65 percent equity and a marginal tax rate of 28 percent. Biogen's tax rate is 28 percent. What will be Biogen's weighted cost of capital for this new division if the after-tax cost of debt is 8 percent, the risk-free rate is 4 percent, and the market risk premium is 10 percent?

Question 18 options:

	10.45%
	16.34%
	21.16%
	17.21%