Kernel Industries has two sources of funds: long-term debt with a market and book value of $5 million issued at an interest rate of 12%, and equity capital that has a market value of $4 million (book value of $2 million). Kernel Industries has profit centers in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 12%, while the tax rate is 25%

Operating income Assets Current Liabilities

St. Augustine $480,000 $2,000,000 $100,000

Austin $600,000 $4,000,000 $300,000

New Orleans $1,020,000 $6,000,000 $600,000

What is the Weighted Average Cost of Capital (WACC) for Kernel Industries?

		.0480
		.0900
		.1033
		.1200