The correct answer is C, but my answer is B. Why it ignores taxes in this question?

lota Industries Market Value Balance Sheet ($ Millions) and Cost of Capital Liabilitie Cost of Assets Capital Cash 250 Debt 650 Debt 7% Other Assets 1200 Equity 800 Equity 14% 35% c lota Industries New Project Free Cash Flows ($ Millions) Year 1 Free Cash Flows ($250) $75 $150 $100 Assume that this new project is of average risk for lota and that the firm wants to hold constant its debt to equity ratio (Tc is the corporate tax rate). lota's weighted average cost of capital is closest to: (a) 8.40% (b) 9.75% (c) 10.85% (d) 11.70% (e) I choose not to