Swollmart is a large conglomerate firm. Its stock has a beta of $0\mathrm{.}8,$ the Treasury bill rate is $4\mathrm{.}5\%$ and the expected return to the market portfolio is $10\%.$

Swollmart's most recent bond issue had a yield to maturity of $8\%$ and the marginal tax rate is $20\%.$ Finally, Swollmart has a debt$/$equity ratio $($D$/$E$)$ of $2.$ What is their weighted average cost of capital?Swollmart is a large conglomerate firm. Its stock has a beta of $0\mathrm{.}8,$ the Treasury bill rate is

$4\mathrm{.}5\%$ and the expected return to the market portfolio is $10\%.$

Swollmart's most recent bond issue had a yield to maturity of $8\%$ and the marginal tax rate is

$20\%.$ Finally, Swollmart has a debt$/$equity ratio $($D$/$E$)$ of $2.$ What is their weighted average

cost of capital?

$7\mathrm{.}2\%$

$9\mathrm{.}8\%$

$5\mathrm{.}6\%$

$10\mathrm{.}1\%$

$6\mathrm{.}5\%$