10. Suppose the Widget Company has a capital structure composed of the following, in billions: Debt $40, Common equity $60, Preferred stock $20. The debt rating is of AA. The yield on AA debt is 10%. The marginal tax rate is 30%. The preferred annual dividend is $10, current stock price is $120. If the risk-free rate is 3%, the expected market risk premium is 5%, and the company's stock beta is 1.35. What is Widget's weighted average cost of capital? A. 0.0725 B. 0.1018 C. 0.0915 D. 0.0860 E. 0.1013