Jamison's Has Expected Earnings Before Interest and Taxes of $11,900

Multiple Choice

Jamison's has expected earnings before interest and taxes of $11,900. Its unlevered cost of capital is 12.8 percent and its tax rate is 21 percent. The company has debt with both a book and a face value of $12,500. This debt has a coupon rate of 7.6 percent and pays interest annually. What is the weighted average cost of capital?

A) 12.48 percent
B) 12.36 percent
C) 12.87 percent
D) 11.38 percent
E) 12.09 percent