McKean, Inc. has a debt-equity ratio of .70 and a tax rate of 34 percent. The firm does not issue preferred stock. The cost of equity is 12 percent and the after-tax cost of debt is 6 percent. What is McKean's weighted average cost of capital?

Laws corporation is considering the purchase of a machine costing $16,000. estimated cash savings from using the new machine are $4,120 per year. the machine will have no salvage value at the end of its useful life of six years and the required rate of return for laws corporation is 12%. the machine's internal rate of return is closest to (ignore income taxes) (a) 12% (b) 14% (c) 16% (d) 18%