Russell Corporations capital structure consists of $ 5,000,000 of assets and $ 2,000,000 of liabilities. Joe Russell,

Question:

Russell Corporation’s consists of $ 5,000,000 of assets and $ 2,000,000 of liabilities. Joe Russell, the corporation’s CEO and largest shareholder, says that the debt has an average interest rate of 9 percent and that shareholders want a 16 percent return. What is Russell Corporation’s cost of capital?
Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...