An analyst is estimating the cost of capital for her firm. She has estimated the before-tax costs of the current sources of capital to be 8 percent of debt and 9 percent for equity, If the firm’s marginal tax rate is 40 percent, the costs of debt and equity she could use in her calculation are closest to:()
A. 4.8% for debt and 5.4% for equity.
B. 4.8% for debt and 9.0% for equity.
C. 8.0% for debt and 5.4% for equity.