The Gupta Company€™s cost of equity is 16 percent. It€™s before-tax cost of debt is 13 percent, and its marginal tax rate is 40 percent. The stock sells at book value. Using the following balance sheet, calculate Gupta€™s after-tax weighted average cost ofcapital:

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Assets Cash Accounts receivable Inventories Net plant and equipment Total assets Liabilities and Equity S 120 Long-term debt $1,152 1,728 240 Equity 360 2,160 $2,880 Total liabilities and equity $2,880