Determine the cost of capital-hatter inc

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Hatter, Inc., has equity with a market value of $22.3 million and debt with a market value of $11.15 million. The cost of debt is 8 percent per year. Treasury bills that mature in one year yield 4 percent per year, and the expected return on the market portfolio over the next year is 10 percent. The beta of the company's equity is 1.08. The firm pays no taxes.

What is the cost of capital for an otherwise identical all-equity firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM132796705

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