Question: WOM Ltd currently has no debt outstanding. Its current cost of equity is 10% and the current market value of the company is $30 million.

WOM Ltd currently has no debt outstanding. Its current cost of equity is 10% and the current market value of the company is $30 million. The company is proposing to finance a third of its assets with debt at a cost of 5% per annum. Ignoring tax effects, the cost of the company's levered equity will be closest to:

Group of answer choices

11.67%.

12.50%.

13.33%.

15.00%.

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