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IK Furnitures unlevered cost of capital is 12 percent, its expected earnings before interest and taxes is $25,600 and its tax rate is 30 percent.
IK Furnitures unlevered cost of capital is 12 percent, its expected earnings before interest and taxes is $25,600 and its tax rate is 30 percent. The company has debt with both a book and a face value of $35,500. This debt has a coupon rate of 8 percent and pays interest annually. What is the weighted average cost of capital?
A. 10.58%
B. 11.20%
C. 11.73%
D. 10.00%
E. None of the above
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