The market value of Charcoal Corporation's common stock is $20 million, and the market value of its risk-free debt is $5 million. The beta of the company's common stock is 1.25, and the market risk premium is 8%. If the Treasury bill rate is 5%, what is the company's cost of capital

The company's cost of capital will be "13%".

Explanation:

The given values are:

Risk free rate

= 5

Beta

= 1.25

Market risk premium

= 8

Now,

⇒  

On substituting the estimated values, we get

⇒                                    

⇒                                    

The total value will be:

=  

=  $

As we know,

⇒  

⇒              

⇒              

⇒              

Note: % = percent

answer; schedule c;