The market value of Charter Cruise Company’s equity is $15 m…
The market value of Charter Cruise Company’s equity is $15 million, the market value of its debt is $5 million and you have $5 million in preferred stock outstanding as well. If the required rate of return on the equity is 20%, the return on preferred stock is 12%, and that on the debt is 8%, what is the company’s cost of capital? You pay a tax rate of 25%.