Percy's Wholesale Supply Has Earnings Before Interest and Taxes of $106,000.Both

Multiple Choice

Percy's Wholesale Supply has earnings before interest and taxes of $106,000.Both the book and the market value of debt is $170,000.The unlevered cost of equity is 15.5 percent while the pre-tax cost of debt is 8.6 percent.The tax rate is 38 percent.What is the firm's weighted average cost of capital?

A) 11.94 percent
B) 12.65 percent
C) 13.45 percent
D) 14.01 percent
E) 14.37 percent