You have been asked to calculate the cost of capital for CMR Inc.

The company owns $2000$ zero coupon bonds. Each coupon bond

zero has a face value of $$1,000,$ matures in $7$ years and is

currently listed at $60\%$ of its par value. The company has $500,000$ shares

shares outstanding, and each share currently trades at $$20.$ YOU

have decided to use the CAPM model to calculate the cost of equity.

The risk$-$free rate is $5\%$ and the market risk premium is $15\%.$ The beta

of the company is $3$ and the expected market return is $20\%.$ The company

also owns $200,000$ preferred shares. Each stock trades at $15$

dollars and the constant annual preferred dividend per share is $$1\mathrm{.}50.$ Finally,

the company is subject to a tax rate of $40\%.$ OTIONS: $37\mathrm{.}07\%,50\%,20\mathrm{.}04\%,23\mathrm{.}4\%$