Helmut Humm, manager at a large U. S. firm, has just been assigned to the capital budgeting area to replace a person who left suddenly. One of Humm’s first tasks is to calculate the company’s weighted average cost of capital (WACC). Humm finds clear notes on the target capital component weights. Unfortunately, all he can find for the cost of capital components is some handwritten notes. He can make out the numbers, but not the corresponding capital component. So, he has to guess. Here is what Humm deciphered: Target weights : wd = 30% , wps = 20% , wce= 50% , where wd, wps, and wce are the weights used for debt, preferred stock, and common equity. Cost of components (in no particular order) : 6.0% , 15.0% , and 8.5%.The cost of debt is the after-tax cost. If Hummguesses correctly, the WACC is:（）
A. 9.2%.
B. 11.0%.
C. 9.0%.
