Solve for the Weighted Average Cost of Capital A)700 Percent
B)6

Multiple Choice

Solve for the weighted average cost of capital. $\begin{array}{lcl}13.60 \%&=&K_{1}&=&\text { cost of equity capital for a leveraged firm }\\3 / 4&=&\lambda&=&\text { debt-to-total-market-value ratio }\\8.0 \%&=&i&=&\text { before-tax borrowing cost }\\40.0 \%&=&\tau&=&\text { marginal corporate income tax rate }\end{array}$

A) 7.00 percent
B) 6.89 percent
C) 6.73 percent
D) 6.67 percent