The following data pertains to Radek Corp., a manufacturer of office supplies (dollar amounts in

thousands). Use this information to complete Questions 2 - 6.

Total assets $8,731

Interest-bearing debt $4,239

Average borrowing rate for debt 10.0%

Common equity:

Book value $3,130

Market value $16,284

Marginal income tax rate 35%

Market equity beta 1.33

6. Using the above information, calculate Radek's weighted-average cost of capital.

a. 11.50%

b. 11.89%

c. 12.48%

d. 13.25%