A company finances its operations and growth opportunities, using common equity and debt. The debt-to-equity ratio of the CI Corp. is 0.3. If its cost of equity is 14%, and its pretax cost of debt is 5%, what comes closest to the companys WACC? The tax rate is 21%.

6.7%

4.5%

7.1%

6.3%

5.8%

The answer is not 7.1%