The Capital Structure for a Particular Project Consists of $500,000

Multiple Choice

The capital structure for a particular project consists of $500,000 of retained earnings, a $2.5 million bank loan with a net after-tax cost of capital of 5.5%, $2.5 million of common shares with a cost of capital of 8.2%.What is the weighted average cost of capital (WACC) for the project?

A) 4.5
B) 5.6
C) 6.4
D) 7.0
E) 7.3