Formulas for Quiz 4 = required return;=rf + Bi(E[rm] -rf) Bp = wi + w2w + + wnn Pt+1 + Divt+1 Pt Rt +1= Pt 1 Variance(?) = (1 - 1)[(R3 R)2 + (R2 R)? + ... + (R R)?] ET - Rt t=2 R= T - 1 = Standard Deviation(o) = V Variance Oi Bi= Pi,m Om NetDebt Equity WACC = rEquity NetDebt + Equity + rDebt: (1 t) NetDebt + Equity 5. (2 pts) As CEO of UO's UFO business, you've been presented with a lucrative business opportunity. However, before considering it, you need to figure out what your cost of capital is. A report from your finance team says that the market risk premium is 6% and the risk-free rate is 1.5%. You know that your tax rate will be 30% this year and your bonds have a yield-to- maturity of 3%. A quick look at the historical beta for your company reveals it has a beta of 1.7. Finally, your head of accounting has told you that you currently have $9,000,000 in equity, $2,000,000 in cash, and $8,000,000 in debt. What must be the cost of capital