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Suppose it's January 2 0 2 1 and you would like to estimate the unlevered cost of capital ( r u ) for Cowbell Corp.

Suppose it's January 2021 and you would like to estimate the unlevered cost of capital (ru) for Cowbell Corp. The current share price of Cowbell is $18 and there are
10 million shares outstanding.You have estimated Cowbell's equity beta as 1.25, and its cost of debt (rD) as 2.75%. The risk-free rate is 1.9% and the market risk
premium is 5%. In addtion, the table below shows the current balance sheet of the firm. Assume that all cash and short-term investments are excess cash. Based on the
information provided, what is the best estimate the unlevered cost of capital for Cowbell? Select one.
1.8.15%
6.80%
5.60%
6.91%
5.5.02%
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