Solve for the Weighted Average Cost of Capital A)867 Percent
B)8

Solve for the weighted average cost of capital. $\begin{array}{lcl}10.60 \%&=&K_{1}&=&\text { cost of equity capital for a leveraged firm }\\1 / 3&=&\lambda&=&\text { debt-to-total-market-value ratio }\\8.0 \%&=&i&=&\text { before-tax borrowing cost }\\40.0 \%&=&\tau&=&\text { marginal corporate income tax rate }\end{array}$

A) 8.67 percent
B) 8.00 percent
C) 7.60 percent
D) 7.33 percent