Baxter Inc. has a target capital structure of $30 million debt, $15 million preferred stock, and $55 million common equity. The company's after-tax cost of debt

is 8%, its cost of preferred stock is 12%, its cost of retained earnings is 14%, and its cost of new common stock is 17%. The company stock has a beta of 1.5

and the company's marginal tax rate is 35%. What is the company's weighted average cost of capital if retained earnings are used to fund the common equity

portion?

O 11.90%

O 12.00%

O 12.10%

O 12.20%