Delta Mills and Franklin Mill Are Identical Firms Except for Their

Multiple Choice

Delta Mills and Franklin Mill are identical firms except for their capital structures.Delta is an unlevered firm with $750,000 in stock.Franklin is a levered firm with $375,000 of stock and an interest rate on debt of 8 percent.Both Delta and Franklin have an expected EBIT of $90,000.Ignore taxes.Delta has a WACC of _____ percent and Franklin's WACC is _____ percent.

A) 12;16
B) 12;14
C) 12;12
D) 14;12
E) 16;16