Alpha Products maintains a capital structure of 40 percent debt and 60 percent common equity. To finance its capital budget for next year, the firm will sell 11% coupon bonds at par value (assume no flotation costs). The firm will finance the rest of its capital expenditures with retained earnings. Alpha expects next year's dividend to be $1.40 per share. Dividends are expected to grow at 7% per year for the foreseeable future. The current market value of Alpha's common stock is $30 per share. If the firm has a marginal tax rate of 40 percent, what is its weighted cost of capital for next year?

8.63%

11.40%

9.64%

7.31%

11.67%