1. You are evaluating the value of Maxima, Inc, a privately-owned company. Maximas income statement and balance sheet are provided below. In this company, all items on the income statement, all assets, and Accounts Payable will increase at the same percentage from 2021 to 2022.

Income Statement	2021		Assumptions:
Revenues	8,476		COGS %			60%
Cost of Goods Sold	5,086		Depreciation %			10%
Depreciation	848		SGA %			12%
SG&A Expense	1,017		Tax			40%
Operating Income	1,526		NWC/Sales			23%
Interest expense	309		Gross PPE/Sales			120%
Earnings before taxes	1,217		Sales growth			6%
Taxes (40%)	487
Net Income	730
Balance Sheet
Cash	169	Accounts Payable		339
Accounts Receivable	848	Long Term Debt			5,066
Inventory	1,271	Total Liabilities				5,405
Total Current Assets	2,289	Paid in Capital			100
Gross PPE	10,171	Retained Earnings			5,260
Accumulated Depr	1,695	Total Shareholders Equity			5,360
Net PPE	8,476	Total Liabilities and
Total Assets	10,765	Shareholders Equity			10,765
		Number of Shares			1,000

You need to find an appropriate discount rate with which to discount Maximas future cash flows. What weighted average cost of capital should be used to evaluate Maxima? Assume Maxima will continue to obtain debt at its 2021 average interest rate (interest expense divided by interest-bearing debt) and its target capital structure is 50% debt and 50% equity. Assume that equity holders are looking for an 11% rate of return on their equity position.