A firm has $100 in equity and $300 in debt. The firm recently issued bonds at the market required rate of 9%. The firms beta is 1.125, the risk-free rate is 6% and the expected return in the market is 14%. Assume the firm is at their optimal capital structure and the firms tax rate is 40%.

What is the firms weighted average cost of capital (WACC) ?

Select one:

a. 8,50%

b. 5,4%

c. 8,6%

d. 7,92%

e. 7,8%