Problem:
Naui's Burgers cost of equity is 16 percent and its after-tax cost of debt is 4.9 percent.
Required:
Question: What is the firm's weighted average cost of capital if its debt-equity ratio is 0.64 and the tax rate is 32 percent?
A. 11.06 percent
B. 11.33 percent
C. 11.67 percent
D. 12.23 percent
Note: Provide support for your underlying principle.