Kitkit Ltd is financed by both debt and equity. The companys systematic risk is 0.79, cost of debt capital is 8.5% p.a. and company pay tax of 30% on its income. Assume company is financed by both debt and equity in its capital structure, where WACC is 18 percent. If ASX 200 expected return is 26% and the risk free return is 4%. Assume company has zero preference shares. What is the portion of Kitkit financed by debt?

a.

29%

b.

14%

c.

18%

d.

22%

e.

27%