Springfield Corporation, Whose Tax Rate Is 40%, Has Two Sources

Multiple Choice

Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%. What is Springfield's weighted average cost of capital (WACC) ?

A) .0480
B) .0800
C) .0912
D) .1000