Trumpit Resorts Company currently has 1.2 million common shares of stock outstanding and the stock has a beta of 2.2. It also has \($10\) million face value of bonds that have five years remaining to maturity and 8% coupon with semiannual payments, and are priced to yield 13.65%. If Trumpit issues up to \($2.5\) million of new bonds, the bonds will be priced at par and have a yield of 13.65%; if it issues bonds beyond \($2.5\) million, the expected yield on the entire issuance will be 16%. Trumpit has learned that it can issue new common stock at \($10\) a share. The current risk-free rate of interest is 3% and the expected market return is 10%. Trumpit’s marginal tax rate is 30%. If Trumpit raises\($7.5\) million of new capital while maintaining the same debt-to-equity ratio, its weighted average cost of capital is closest to:

A. 14.5%.

B. 15.5%.

C. 16.5%.