Recall the HBS Case on Marriott Corporation on the topic of cost of capital, also known as Weighted Average Cost of Capital (WACC). Assume that Marriott Corporations restaurants division has cost of debt of 10%, cost of equity of 20%, corporate tax rate of 34%. Also, Marriotts restaurants divisions historical leverage was 60%, but the division is aiming to reduce its leverage to 40%. What is the appropriate hurdle rate for Marriotts restaurants division going forward?

A.

15.00%

B.

14.00%

C.

11.96%

D.

16.00%

E.

14.64%