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Consider a firm that has a debt-equity ratio of 1/3. The rate of return for debt is 7% and the rate of return for equity

Consider a firm that has a debt-equity ratio of 1/3. The rate of return for debt is 7% and the rate of return for equity is 11%. The corporate tax rate is 30%. What is the weighted-average cost of capital?

A) 8.78%

B) 8.97%

C) 9.48%

D) 9.67%

E) 10.00%

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