cchang

If you see a problem like this on the test, you'll hear a chorus of groans from all of the Level I candidates when they see this question, don't even bother doing it until you've finished every other question.

You need to unlever your Beta with Hodgkins data and then relever using Degen data. Then you plug this Beta into CAPM to solve for Ke. Using the D/E ratio of Degen solve for the WACC components with the given inputs and adjust your debt for Tax.

The answer is C.