Given the following information about a firm:
　　* debt-to-equity ratio of 60%
　　* tax rate of 30%
　　* cost of debt of 7%
　　* cost of equity of 12%,
　　The firm’s weighted average cost of capital (WACC) is closest to:
　　A.7.5%.
　　B.9.3%.
　　C.10.3%.
　　Solution: B
　　Convert D/E to the weight for debt:
　　The weight for equity is one minus the weight of debt:
　　WACC = weight of debt×cost of debt×(1 — tax rate) + weight of equity×cost of equity