Johnson Has a Target Capital Structure of 60% Common Stock

Multiple Choice

Johnson has a target capital structure of 60% common stock, 5% preferred stock and 35% debt. The firm's cost of equity is 10%, its cost of preferred is 4% and the pretax cost of debt is 6%.   If the tax rate is 34%, what is Johnson's weighted average cost of capital? ​

A) 8.30%​
B) 7.59%​
C) 5.48%​
D) 5.55%​