Find the composite cost of capital

Reference no: EM1373101

A company plans to increase $4 million through borrowing at an interest rate of 16% and to raise $1 million by issuing common stock. The company's stock has a beta coefficient of 2, risk free interest rate is 6 percent, average rate of return on stock is 9% and marginal tax rate is 25%.

Find the company's composite cost of capital?

Reference no: EM1373101

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