12. Kelly's Automotive has 175,000 shares of common stock outstanding at a market price of $28 a share and a market beta of 0.9. There are 25,000 shares of preferred stock outstanding at a market price of $40 a share. The cost of preferred stock of 8.9 percent. The outstanding bond issue of the company has a face value of $1,255,000 and a market price of $1200. The maturity of the bonds is 10 years and coupon rate is 9%. Coupons are paid semi-annually. Market return is 14% and risk-free rate is 5%. The company's tax rate is 40 percent. What is the weighted average cost of capital of Kelly's Automotive?

A. 10.63%

B. 10.88%

C. 11.15%

D. 13.61%

E. None of the above