Berkley's Has Expected Earnings Before Interest and Taxes of $3,800

Multiple Choice

Berkley's has expected earnings before interest and taxes of $3,800. Its unlevered cost of capital is 14.5% and its tax rate is 35%. Berkley's has debt with both a book and a face value of $2,200. This debt has a 7.5% coupon and pays interest annually. What is the firm's weighted average cost of capital?

A) 12.48%
B) 12.99%
C) 13.87%
D) 14.14%
E) 14.37%