Cepoor is evaluating Lichonson as its acquisition target. Lichonson has 684,000 shares outstanding. The current market price for Lichonsons shares is $46, but that is following a $40 Tender Offer price proposed just a month ago by another firm, Torper, which could not tender all the needed shares. In the year prior to any acquisition discussions, Lichonsons share price was around $36. The book value of equity is $16 mln. The book value of debt for Lichonson is $12 mln and its bonds are trading at par, so the market value of debt is also $12 mln. The YTM on Lichonsons bonds is 8%. The cost of equity for Lichonson is 15%. Lichonson is subject to a 40% tax. Lichonsons capital structure is similar to that of an average firm in its industry. Which discount rate is the closest to the one Cepoor should use to discount the cash flows it estimated for Lichonson?

Group of answer choices

12.2%

10.6%

15%

11.9%

9%