After calculating the value of each source of funds, you determine debt $=50\%$; preferred $=5\%$;

common $=45\%,$ estimate the cost of capital, assuming the cost of new debt $=7\%$; preferred $=9\%$;

common $=12\%,$ for a company in the $25\%$ tax bracket.

A$.10\mathrm{.}4\%$

B$.9\mathrm{.}7\%$

C$.8\mathrm{.}5\%$

D$.$ it depends