Assume that you have been hired as a consultant by XNB, a metal manufacturer, in order to estimate the firm's weighted average cost of capital.The balance sheet and some other information are provided below.

Assets

Current assets$ 38,000,000

Net plant, property, and equipment101,000,000

Total assets$139,000,000

Liabilities and Equity

Accounts payable$ 10,000,000

Accruals9,000,000

Current liabilities$ 19,000,000

Long-term debt (40,000 bonds, $1,000 par value) 40,000,000

Total liabilities$ 59,000,000

Common stock (10,000,000 shares)30,000,000

Retained earnings50,000,000

Total shareholders' equity80,000,000

Total liabilities and shareholders' equity$139,000,000

The stock is currently selling for $14.00 per share, and its noncallable $1,000 par value, 20-year, 8.25% bonds with semiannual payments are selling for $905.00.The beta is 1.1, the yield on a 6-month Treasury bill is 2.50%, and the yield on a 20-year Treasury bond is 5.25%.The required return on the stock market is 9.00%, but the market has had an average annual return of 14.50% during the past 5 years. The firm's tax rate is 40%. What is the best estimate of the firm's WACC?

A.

9.13%

B.

8.60%

C.

10.03%

D.

11.53%