Westworld Industries has an expected EBIT of $1,000,000, a cost of equity of 11% and a cost of debt of 5%. Westworld s debt-to-equity ratio is 1/3. The corporate tax rate is 25%. What is the appropriate discount rate if you are using the WACC method to value Westworld?"

A.

7.1%

B.

10.2%

C.

7.7%

D.

9.2%

E.

12.6%