Use the following data to answer Question 16: Luna Fifield, CFA, is reviewing MBC Companys financial statements. MBCs long-term debt total $35 million, while total shareholder equity equals $140 million. MBCs long-term debt consisting of 15-year bonds making semiannual coupon payments of $60 with a par value of $1000. Each bond was sold for $1244.33. MBCs tax rate is 40% and its beta is 0.9. Luna gathers the following additional facts: Treasury bills earn 4.0%. The risk premium of the stock is 4.05%.

16. Based on the information provided, MBCs weighted average cost of capital is closest to: *

10 points

A. 6.17%

B. 4.31%

C. 3.80%

D. 7.2%

E. None of the above