LipTea Incorporated Purchases Raw Materials and Has Processing Plants Around

Multiple Choice

LipTea Incorporated purchases raw materials and has processing plants around the world. The firm has an average pre-tax cost of debt of 8%, an average tax rate of 40%, and an international equity beta of 1.2. The risk-free rate of return is anticipated to be 4% and the return to the international market portfolio to be 12%. If the firm finances 40% with debt and 60% with equity, what is the after-tax WACC?

A) 10.08%
B) 12.96%
C) 11.36%
D) 10.50%