The Following Data Pertains to Zonk Corp -
Using the Above Information, Calculate Zonk's Weighted-Average Cost

Multiple Choice

The following data pertains to Zonk Corp., a manufacturer of ball bearings (dollar amounts in millions) :
$\begin{array}{llcc} \text { Total assets } &\$6,840 \\ \text { Interest-be aring debt } &\$3,562\\ \text { Average pre-tax borrowing cost } &11.5\%\\ \text {Common equity. } &\\ \text { Book value } &\$2,560\\ \text { Market value } &\$12,850\\ \text { Income tax rate} &35\%\\ \text { Market ecuity beta} &1.24\\\end{array}$
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Using the above information, calculate Zonk's weighted-average cost of capital:

A) 11.5%
B) 11.89%
C) 7.48%
D) 10.90%