a. Suppose that your firm has a cost of equity of 14% and a pre-tax cost of debt of 8%. If the target debt/equity ratio is 0.40, and the tax rate is 30%, what is the firm's weighted average cost of capital (WACC)?

10.64%

11.6%

12.3%

13.52%

b. Preferred stock should be ignored when computing a firm's weighted-average cost of capital.

true

False

please answer both parts