Olden Company Has a Tax Rate of 40 Percent What Is the Weighted Average Cost of Capital?
A)0

Multiple Choice

Olden Company has a tax rate of 40 percent. Information for the company is as follows: $$\begin{array} { l r c } & \text { Amount } & \text { After-tax Cost } \\\text { Mortgage bonds }& \$ 1,000,000 & 0.048 \\\text { Unsecured bonds } & 3,000,000 & 0.050 \\\text { Common stock } & 6,000,000 & 0.150\end{array}$$ What is the weighted average cost of capital?

A) 0.0827
B) 0.2480
C) 0.1098
D) 0.0366