1. Howard industries has a target capital structure consisting of 45% debt, 5% preferred stock, and 50% common equity. The before-tax YTM on Howard's long-term bonds is 9.5%, its cost of retained earnings is 12.5%. If the firm's tax rate is 40%, what is Howard's WACC if it doesn't have to issue new common stock?

A 10.24% B 10.01%

C 9.22%

D 9.79%

E 9.67%