PrimaCare Has a Capital Structure That Consists of $7 Million

Multiple Choice

PrimaCare has a capital structure that consists of $7 million of debt,$2 million of preferred stock,and $11 million of common equity,based upon current market values.The firm's yield to maturity on its bonds is 7.4%,and investors require an 8% return on the firm's preferred and a 14% return on PrimaCare's common stock.If the tax rate is 35%,what is PrimaCare's WACC?

A) 7.21%
B) 8.12%
C) 10.18%
D) 12.25%