XYZ Corporation's Capital Structure Consists of 60% Debt (With a Pretax

Multiple Choice

XYZ Corporation's capital structure consists of 60% debt (with a pretax cost of 10%) , and the balance of common equity (with a cost of 15%) . The company's income tax rate (federal and state combined) , t, is 40%. XYZ's weighted-average cost of capital (WACC) , to one decimal point, is:

A) 8.4%.
B) 9.0%.
C) 9.6%.
D) 11.4%.
E) 12.0%.