Calculate the cost of capital (WACC) for your division based on the following information.

You found three independent firms solely engaging in the same business of your division. Firm A has a beta of 1.5 and D/E of 0.8, firm B has a beta of 1.8 and D/E of 1, and firm C has a beta of 2 and D/E of 1.5.

Your divisions D/E is 0.8. The tax rate is 40%. The before tax cost of debt is 9%. The risk free rate is 3% and the market return is 10%.

What is your division's WACC?

Select one:

a. 10.19%

b. 7.12%

c. 11.23%

d. 10.62%

e. 9.63%