A $1,000,000 real estate investment is financed with $800,000 in debt at an annual 5% interest rate (k_d) and $200,000 in equity at an annual 10% cost of equity (k_e). The tax rate (t) is 25%.

This investments Arditti-Levy method weighted (overall) average cost of capital is:

	a.	7.5%
	b.	5%
	c.	6%
	d.	cannot determine without knowing the principal payment on debt