A company uses debt to finance 30 percent of its operations and uses stocks to finance the remaining 70 percent

Accounting Aug 28, 2020

A company uses debt to finance 30 percent of its operations and uses stocks to finance the remaining 70 percent. if the cost of the stock averages 15 percent and the after-tax cost of the debt is 10 percent, what is the average cost of capital for the company?

(a) 13.5 percent

(b) 15.2 percent

(d) 19.0 percent