Fayer Farms aims to maintain a debt-equity ratio of 0.20. The firm enjoys a low equity beta of 0.50 and can borrow at 4.20%. The risk-free rate is 4%, the expected return of the market is 10%, and Fayers tax rate is 30%.

What after tax weighted average cost of capital (WACC) would Fayer use to evaluate projects with risk equivalent to the companys average level of risk?

A. 7.00%

B.6.23%

C.6.12%

D. 6.32%

E.6.00%