The market value of a company is 100 million. Other market values are as follow: 50 million of equity, 25 million
of long term debt and another 25 million of short term debt.
The cost of equity is 8%, and the one for long term debt is 4% and 3% for the short term debt, with a marginal tax rate of 20%.
Weighted average pre-tax cost of capital should be?