Consider the financial information of Harding Hotels and Young Inns, the two hotel chains.
|
Company
|
Debt/Assets
|
β
|
Cost of debt
|
Tax rate
|
|
Harding Hotels
|
27%
|
1.35
|
10%
|
34%
|
|
Young Inns
|
30%
|
?
|
8%
|
32%
|
At present, the risk-free rate is 3.1% and the expected return on the market 11%. Find the weighted average cost of capital for Young.