The Lever Crowbar Company Has a Target Capital Structure of 70

Multiple Choice

The Lever Crowbar Company has a target capital structure of 70 percent debt and 30 percent equity with no preferred stock.  The firm doesn't plan to raise equity capital beyond next year's retained which have a cost of 15%.  Debt costs the company 8 percent before taxes of 40%. What is Lever's weighted average cost of capital.

A) 4.50%
B) 14.0%
C) 7.60%
D) 7.86%