What would be the weighted average cost of capital for Limp Linguini Noodle Makers, Inc. under the following conditions?
*The capital structure is 40% debt and 60% equity
*The before-tax cost of debt (which includes flotation costs) is 20% and the firm is in the 40% tax bracket.
*The firm’s beta is 1.7
*The risk-free rate is 7% and the market risk premium is 6%
Show calculation and work.