Problem:
Assume a for-profit skilled facility chain has a target capital structure that is 40% debt and 60% equity. Assume the chain plans to finance a new project with 50% debt and 50% equity. The marginal before-tax cost of debt is 8%, the tax rate is 35%, and the marginal cost of equity is estimated to be 14%.
Required:
Question: What is the organization's corporate cost of capital (rounded to the nearest tenth of a percent)?
Note: Please show guided help with steps and answer.