Jemisen's Has Expected Earnings Before Interest and Taxes of $6,200

Multiple Choice

Jemisen's has expected earnings before interest and taxes of $6,200. Its unlevered cost of capital is 13 percent and its tax rate is 34 percent. The firm has debt with both a book and a face value of $2,500. This debt has a 9 percent coupon and pays interest annually. What is the firm's weighted average cost of capital?

A) 12.48 percent
B) 12.66 percent
C) 13.87 percent
D) 14.14 percent
E) 14.37 percent