Medzyme Pharmaceuticals has maintained a 50–50 D-E mix for capital investments. Equity capital has cost 11%; however, debt capital that has historically cost 9% is now 20% higher than that. If Medzyme does not want to exceed its historical weighted average cost of capital (WACC), and it is forced to go to a D-E mix of 75–25, the maximum acceptable cost of equity capital is closest to: (a) 7.6% (b) 9.2% (c) 9.8% (d ) 10.9%

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