Question: Use the table for the question(s) below. Consider the information for the following four firms: Firms Cash Debt Equity r_D r_E t_c A 10 125

  1. Use the table for the question(s) below.

    Consider the information for the following four firms:

    Firms Cash Debt Equity r_D r_E t_c
    A 10 125 145 7.50% 14.00% 40.00%
    B 35 225 625 6.50% 11.00% 35.00%
    C 50 175 325 5.00% 10.50% 35.00%
    D 60 350 150 3.50% 9.50% 30.00%

    Note that these companies have different tax rates due to their specific situations. The weighted average cost of capital for firm A is closest to:

    A.

    9.8%
    B.

    10.0%
    C.

    11.1%
    D.

    9.1%

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