B is corrent. 7.9% = [6% x (1 —.4)] x $10,000,000 / 40,000,000 + (6% x $5,000,000 / 40,000,000) + (10% x $25,000,000 / $40,000,000).
A is incorrect. This is less than the weighted-average cost of capital.
C is incorrect. This is greater than the weighted-average cost of capital.
D is incorrect. This is greater than the weighted-average cost of capital.
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