The following information relates to the Falcon Division of Xenon Enterprises:

Interest rate on debt capital		9	%
Cost of equity capital		13	%
Market value of debt capital	$	51	million
Market value of equity capital	$	81	million
Income tax rate		35	%

On the basis of this information, Falcons weighted-average cost of capital is closest to:

Multiple Choice

• 4.64%.

• 9.58%.

• 10.24%.

• 11.45%.

• None of the answers is correct.