Assume that Cisco Systems has 45 million shares outstanding trading for $15 per share. In addition, Cisco has $113 million in outstanding debt. Suppose Ciscos equity cost of capital is 18%, its debt cost of capital is 7%, and the corporate tax rate is 35%.

What is Ciscos unlevered cost of capital? What is Ciscos weighted average cost of capital?

a. Ciscos unlevered cost of capital is 14.7% and the weighted average cost of capital is 14.3%.

b. Ciscos unlevered cost of capital is 14.3% and the weighted average cost of capital is 13.9%.

c. Ciscos unlevered cost of capital is 16.42% and the weighted average cost of capital is 16.07%.

d. Ciscos unlevered cost of capital is 13.9% and the weighted average cost of capital is 13.4%.