A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. 60% common stock equity, 30% debt, 10% preferred stock.

Debt: The firm can sell a 12-year, $1,000 par value, 7 percent bond for $1,000.

Preferred Stock 8.0% annual dividend coupon

Common Stock: The beta on the company's common stock is 0.8. The expected return of the market is 10% and the current yield on the 10 year Treasury bond is 6%;

Additionally, the firm's marginal tax rate is 40 percent. What is the WACC (weighted average cost of capital) for the company?

Group of answer choices

7.95 percent

10.46 percent

7.26 percent

7.58 percent