The Five and Dime Store Has a Cost of Equity

Multiple Choice

The Five and Dime Store has a cost of equity of 14.8 percent, a pretax cost of debt of 6.7 percent, and a tax rate of 34 percent.What is the firm's weighted average cost of capital if the debt-equity ratio is .46?

A) 10.18 percent
B) 11.72 percent
C) 11.53 percent
D) 13.49 percent
E) 14.93 percent