Assume a firm can be financed with £400K of debt and £600K of equity that has a beta of 2.0. If the risk-free rate is 3.5%, corporate taxes are 30% and the equity premium is 5%, what is the cost of capital of the overall firm to the nearest 10 of a percent?
a) 9.5%
b) 13.5%
c) 4.9%
d) 4.5%
e) 9.1%