A firms capital structure has 30% long-term bonds, 50% common equity, and 20% preferred stock. Its cost of common equity is 10%, yield-to-maturity on bonds is 8%, and cost of preferred stock is 7%. The corporate income tax rate is 25%.

Find its weighted average cost of capital.

A.6.5%

B. 7.2%

C. 7.8%

D.8.2%

E. None of the above