3. A firm has a capital structure with $120 million in equity and $80 million of debt. The cost of equity capital is 10% and the pretax cost of debt is 7%. If the marginal tax rate of the firm is 35%, compute the weighted average cost of capital of the firm. A) 4.5% B) 6.5% C) 10.4% D) 8.8% E) 9.4%