单选题

Given the following information about a firm:
·debt-to-equity ratio of 50%
·tax rate of 40%
·cost of debt of 8%
·cost of equity of 13%,
the firm's weighted average cost of capital (WACC) is closest to:

A、 7.5%.
B、 8.9%.
C、 10.3%.

【正确答案】 C

【答案解析】

C is correct. Convert D/E to the weight for debt:
The weight for equity is 1 minus the weight of debt:
WACC = Weight of debt × Cost of debt × (1 - Tax rate) + Weight of equity × Cost of equity