Jones Company Has a Target Capital Structure of 30% Debt,15

Multiple Choice

Jones Company has a target capital structure of 30% debt,15% preferred stock,and 55% common equity.The company's after-tax cost of debt is 7%,its cost of preferred stock is 11%,its cost of retained earnings is 15%,and its cost of new common stock is 16%.The company stock has a beta of 1.5 and the company's marginal tax rate is 35%.What is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion?

A) 11.20%
B) 12.00%
C) 13.80%
D) 14.45%