the company has 80,000 outstanding bonds which are quoted at their face value. Bonds with similar characteristics have a yield of 8.5%. The company also has 4 million common shares outstanding. Equity has a beta of 1.1 and is priced at 40 per share. The yield on Treasury bills is 4% and the market risk premium is 8%. Giacomo Edile's tax rate is 35%.

why the weighted average cost of capital of the company is 10.38%